Regular assessments conducted by insurer MUA have shown that about 90% of women – particularly in the high end market – significantly undervalue the cost of their wardrobes, estimating them to be just half of their actual value.
The main reason behind underinsurance results from the fact that insurance values are calculated on the replacement cost of items. If you haven’t conducted an up to date assessment of your belongings you could be in for a shock. A designer suit that would have cost you R2 000 a few years ago, may well cost around R10 000 to replace now.
Although it’s rare that an entire wardrobe would need to be replaced it could prove a costly exercise should a break-in or fire occur. “It is vital for women to have apportioned the correct replacement value to their wardrobe to ensure everything can be replaced,” advises Christelle Fourie, managing director of MUA Insurance Acceptances. “Many home insurance policies tend to have a limit on replacement value, therefore if the contents of the wardrobe are higher than normal it is advisable to take out extra cover.”
Insurance for a woman’s handbag and its contents is also a must. Fourie adds that this is a relatively cheap addition but is always worth the additional cost. “Women must also bear in mind that it is never advisable to carry valuable jewellery they are not wearing at the time in their handbag - a common practice among women when changing a watch or jewellery to suit their new outfit. Most insurance policies will stipulate that jewellery over a certain value must be stored in a safe when not worn,” warns Fourie.
To ensure that you are not underinsured it’s important to conduct regular valuations of the jewellery at a reputable jeweller to ensure the jewellery is insured for the most up-to-date replacement value. “Fluctuations in precious metal prices can result in jewellery becoming underinsured. For example, if someone purchased a diamond ring in 2007 valued at R65 000, their current replacement cost of the ring could be as much as R120 000 due to fluctuations in the price of gold and other precious metals, so it must therefore be insured for this higher amount in case of loss, theft or damage,” explains Fourie.
“It is also important to always ensure an authentic valuation certificate - that properly identifies and describes all content of the jewellery, i.e. precious stone content, gold weights and certificates from independent diamond laboratories - is received with every purchase of expensive jewellery. This will assist with future valuations, especially if there are drastic changes based on the exchange rate,” says Fourie.
“With these above tips in mind, every woman can take better control to ensure their personal belongings are fully protected against left, loss or damage. When in doubt, it is always best to consult the services of a trusted financial advisor who can advise on the best solution and assist when it comes to claims handling,” concludes Fourie.