Why South Africans face the risk of underinsurance

SOUTH Africans are dangerously underinsured, and the consequences can be financially devastating. Whether it's damage to a home, loss of personal belongings, or major agricultural losses, too many individuals only discover gaps in their coverage when it's far too late.

- JONATHAN LINDEQUE

In many cases, policies don’t reflect the true value of assets, leaving policyholders out of pocket when they need help the most. At the heart of this issue are two key problems: a widespread lack of understanding about how insurance works, and a deep mistrust in the industry itself.

Insurance feels like a luxury for many South Africans, but the risk of being underinsured or uninsured entirely is far more costly in the long run. One incorrect calculation or overlooked item could mean a reduced payout, an inability to replace vital equipment, or even insolvency.

The real risks of underinsurance

If your business suffers a fire, flood, or theft, and you've under-declared the value of your assets or used outdated figures, you'll only receive a partial payout. Even more concerning is underinsurance in business interruption cover. Clients often default to accounting gross profit instead of using the correct insurance definition, and this is where we see the biggest gaps and the highest claim shortfalls.