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Average is when your claim’s payout is reduced by the proportion (%) of how much you under-insured your stuff by.

How does the principle of average work?

Let’s say you insured your home contents for R50,000 even though it will cost you R100,000 if you had to go to the shop and replace it all today. By choosing an insured value of R50,000, you have effectively chosen to insure your content for half its value. This implies that you will only get a 50% payout on any claim you submit, regardless of whether you lose a portion of your stuff or all of it. So, if your home burns down and all your stuff is destroyed, the insurer will only pay you R50,000 leaving you to pay for the other half out of your own pocket. The same principle holds true if your stereo worth R20,000 is stolen, you will only receive 50%, i.e. R10,000.

How do I prevent average being applied?

To avoid average, make sure you insure your stuff for what it would cost to replace it as new (also known as replacement value). Also, update the value of your home contents and property at least annually to account for inflation or for any new things you’ve bought. If you are covered by Naked, you can update the value of your insured items instantly on the Naked app.

How does my insurer know if I am underinsured?

When you make a claim, your insurer might send an assessor to your home to determine the replacement value of your home contents or property. If their calculated replacement value (the cost to replace all items with new ones) is higher than the value you insured your stuff for, they will determine that you are underinsured and will then apply average to your claim.


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