Is your home actually covered — or just sort of covered?
Most South African homeowners are underinsured without even knowing it. Here’s what that means, why it happens, and what you can do about it.
What is underinsurance?
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It means your insured amount is less than what it would actually cost to rebuild your home or replace your belongings today. If disaster strikes — fire, flood, theft — your payout may fall short of your real losses. This shortfall comes out of your own pocket.
So What Do We Know About Lithium?
Lithium is an alkali metal that is highly unstable and extremely light — it actually floats on water. When heated, it produces VOC (volatile organic compound) gases — vaporised electrolytes including hydrogen fluoride (HF) — at temperatures between 170°C and 500°C. A venting Li-ion cell releases mainly carbon dioxide (CO2), but lithium also reacts with water to form hydrogen gas, which is highly explosive. A Li-ion fire generates its own oxygen when burning, making it almost impossible to smother. Burning lithium creates a metal fire at temperatures of up to 2,000°C.
A quick example
Your home is insured for R1.2m but the true rebuild cost is R1.8m. You’re only covered for 67% of the value. Most policies apply a “pro-rata” or average clause — meaning even a partial claim could be reduced proportionally. A R300 000 claim could result in a payout closer to R200 000.
Why does this happen?
Building costs rise: SA construction costs have surged — materials, labour, and compliance costs all increase yearly. Your policy sum rarely keeps pace automatically.
Set-it-and-forget-it: Many people insure at bond value or purchase price and never revisit it — even after renovations or extensions that add significant value.
Contents creep: We accumulate electronics, appliances, and furniture over time. A R300 000 contents limit set five years ago may not reflect today’s reality at all.
Practical steps for SA homeowners
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Get a professional rebuild valuation: A registered quantity surveyor or property valuer can give you the true replacement cost — not the market value. The ASAQS (Association of SA Quantity Surveyors) can help you find one. This is different from what your home could sell for.
Review your policy annually — not just at renewal: Especially if you’ve renovated, added a wendy house, installed solar panels, or upgraded your kitchen. These all affect your rebuild cost and your contents value significantly.
Create a home contents inventory: Walk through your home and photograph your belongings room by room. Note serial numbers on electronics. Store this list securely in the cloud — it makes the claims process far smoother and ensures nothing is forgotten.
Ask your broker about inflation-linked cover: Some insurers offer automatic annual sum increases linked to building cost indices. This doesn’t replace regular reviews but helps close the gap between review cycles. Your broker can advise which products include this.
Don’t confuse bond value with rebuild value: Your bank’s bond amount reflects land + market factors. Your insurer needs the cost to rebuild the structure from scratch — typically a much higher figure, especially after load shedding-related electrical upgrades and general building cost inflation in SA.
WORTH KNOWING · LEGACY UNDERWRITING MANAGERS
Built-in valuations every 3 years
Legacy Underwriting Managers offers a product option that includes professional building and contents valuations on a 3-year cycle — taking the guesswork out of staying correctly insured. It’s a practical way to make sure your cover keeps up with reality, without having to remember to do it yourself.
Speak to your broker to find out whether this option is right for your policy and circumstances.
The goal isn’t to pay more in premiums — it’s to make sure that if the worst happens, you can actually rebuild your life. A short conversation with your broker costs you nothing and could save you everything.