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Under-insurance
Under-insurance occur when the amount for which the
property is insured, is less than the value of such property.
Remember to insure your property for
its replacement value and NOT for the purchase amount!
(Unless it
is new property!)
Where loss/damage occur, there
are two insurers, namely:
- the Insurance company, and
the Insured as his/her own insurer;
EXAMPLE:
Value of
property...........................................R24 000
Sum
insured..................................................R18 000
Difference
(as his/her own insurer).................R 6 000
In event of loss/damage of R12 000, each of the
"insurers" contribute as follows:
INSURANCE COMPANY:
R18 000/R24 000 X R12
000/1 = R 9 000
INSURED (as his/her own insurer):
R6 000/R24 000 X R12
000/1 = R 3 000
THUS:
R9 000 + R3 000
= R12 000
The condition of
average is applicable in respect of the following sections:
- Householders
(Contents)
- Houseowners
(Buildings)
- Sail-boats,
motor-boats and other small craft.
The section where
under-insurance occur mostly, is the Householders (Contents) Section.
To prevent
that the contents of your house is under-insured, you can get an Inventory from us which
will help you to be more accurate when selecting the sum to insure for!
Click here to receive an Inventory from us.
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