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 "insurer" contribute:

INSURANCE COMPANY
R18 000/R24 000  X   R12 000/1 = R9 000

INSURED (as his/her own insurer)
R6 000/R24 000   X   R12 000/1 = R3 000

THUS: R9 000 + R3 000 = R12 000

The condition of average is applicable in respect of the following sections of a short-term insurance policy:
  • Householders (Contents Insurance)
  • Houseowners (Buildings Insurance)
  • Sail-boats, motor-boats and other small craft.