If you live in KwaZulu-Natal and are insured, you probably sleep peacefully at night believing your insurance policy has you fully covered. But what if you're wrong? Whether you're a homeowner in Durban North, a small business owner in Pietermaritzburg or a farmer in the Midlands – underinsurance is a silent risk, that could leave you financially exposed when disaster strikes.
What is underinsurance?
Being ‘underinsured means your insurance coverage is less than the actual value of the item or risk being insured. In the event of a claim, the payout may be only a fraction of what you need to replace the item or repair the loss – putting you at serious financial risk.
Why is it such a big problem in KZN
KZN faces unique risks that make adequate insurance even more critical:
Natural disasters and climatic events
Flooding and storms (like those seen in 2022) are becoming more frequent and intense and the damage is exacerbated by poor infrastructure maintenance.
Many homes and businesses damaged in these events were underinsured, resulting in devastating out-of-pocket costs.
Business interruption risks
Load shedding, protests and supply chain disruptions have impacted businesses across the province.
If your business interruption cover is outdated or minimal, you might not survive a prolonged closure.
High vehicle crime rates
KZN is among the top provinces for vehicle theft and hijackings. Many people insure their vehicles based on outdated market values or choose higher excesses to reduce premiums, not realising how much they’d have to cover themselves in a claim.
Examples of underinsurance in case studies (KZN Edition)
Homeowners:
A homeowner insured his house in Hillcrest for R1.2M the amount the house cost him 10 years ago. A fire destroyed the property and the cost of a rebuild was R2.1 million. The owner is left with a R900,000 shortfall.
In addition, some of the houses in Durban North are older and were built to code 40 years ago. This resulted in a retaining wall, which was washed away in the floods and replaced but didn’t meet current building regulations. This resulted in claim payment shortfalls.
Business owners: A bakery in Ballito had R500,000 cover for equipment. Load shedding and a fire caused R1.2 million in damages. The business was forced to close down because of insufficient cover.
How to protect yourself
1. Do a regular insurance review
Ensure your home, car and contents are covered at current replacement values.
Adjust cover yearly, especially after renovations or big purchases.
2. For business owners
Review both asset and business interruption cover. Consider risks specific to KZN (riots, weather events, power cuts).
3. Check your policy details
Understand exclusions, excesses and whether you’re insured for replacement value vs market value. Make sure your broker is proactive – not reactive.
Final thought
Underinsurance isn't just a small error on your part. It’s a major financial risk hiding in plain sight. In KZN, where unique environmental, economic and security challenges exist, being properly insured isn't a luxury. It’s a necessity.
The worst time to find out you are underinsured is when you need to claim. Get your cover reviewed today.
Ursula Botha - Regional Head: KZN
