Why “Average” and Underinsurance Matter More Than You Think
What is household contents insurance?
- Furniture
- Appliances
- TVs and electronics
- Clothing and shoes
- Rugs and décor
- Kitchenware
- Curtains and blinds
In simple terms: If you tipped your house upside down, whatever falls out should be insured under contents.
The most common mistake: “I’ll just insure what could get stolen”
Many people think: “I’ll insure my TV, laptop, couch and a few valuable items — that’s all I really need.” This feels logical, but it’s fundamentally flawed.
Insurance doesn’t work on selected items you think are at risk. It works on the total replacement value of everything you own.
Why? Because burglary is not the only risk. Fire, burst geysers, floods, storms and accidental damage often affect everything at once, so even partial losses trigger the average clause.
What does “average” actually mean?
The average clause is applied when you insure your contents for less than their true replacement value.
If you are underinsured, the insurer treats you as if you chose to self-insure the shortfall — and they reduce every claim proportionally.
The formula (in plain English): You only get paid in proportion to how well you insured yourself.
A simple example (no total loss involved)
Let’s say:
- The true replacement value of your contents is R1,000,000
- You insured them for R600,000
- You suffer a burglary loss of R200,000
- You might expect to receive R200,000.
But here’s what actually happens:
- You insured only 60% of what you should have.
- So the insurer only pays 60% of your claim.
- Payout: R120,000
- You fund the remaining R80,000 yourself
And this is not because the insurer is being unfair — it’s because the policy is doing exactly what it said it would.
