A TYPICAL VAR CALCULATION by a Loss Adjuster / Assessor prepared to show Under Insurance at time of a Claim is Brief,
Whereas

One supporting an upfront Insured Value must be;
• Clear, Detailed and Transparent
• Verifiable
• Defendable

OUR CALCULATIONS ARE
• Prepared professionally by real people, not Algorithms or AI, and detail all Elements of a VAR Calculation with full disclosure of Rates Sources and details of Allowances, Provisions and Information relating to Forecasts.
• Tailored to each property from information and photographs to be supplied by the Owner and / or Agent and from Satellite Imagery and Details from South Africa’s Surveyor General’s office

A SIMPLISTIC FINANCIAL EXAMPLE OF LOSS FROM UNDER INSURANCE

Assume a property that should be Insured for R 2 000 000, is Under Insured by 30% at R 1 400 000
• The monthly Premium on R 1 400 000 is approx. R 322.
• The monthly premium on R 2 000 000 is approx. R 460
• The Premium saving in this example is a mere R 138 per month
• Assume a legitimate Claim for R 100 000 occurs.
• Because of 30% Under Insurance the Settlement is adjusted for “Average” and reduced from R 100 000 to R 70 000, a loss of R 30 000.
• It will take some 18 + years to offset this example’s Premium Savings.

POLICY HOLDERS OBLIGATIONS (PHOs)

Frequently overlooked PHOs are;
• Property Maintenance – innocuous items such as blocked gutters and stormwater drains causing water damage are grounds for claim repudiation.
• Updating the Insured Value for Alterations and Extensions since the policy was taken out creates Under Insurance
• Failing to Update the Insured Value for adding of items such as Swimming pool or Solar Power also create Under Insurance
• Failing to obtain an Electrical COC after Electrical Alterations can also be cause of a claim repudiation.

• Change of Use or non-disclosure of use beyond Residential since at or subsequent to policy inception such as;
 • using a garage for a business workshop and storing flammable materials will affect both Property Zoning and Policy conditions.

All are breaches hese are the responsibility of The Insured

Along with Alterations, Extensions and Upgrades is the responsibility for Contract Works Insurance during the works is frequently misunderstood.

The Standard JBCC Building Contract most used in Domestic works states;
“The Employer shall be at Risk for and indemnifies and holds the Contractor harmless from claims or proceedings for damages, expenses and or / loss (including legal fees and expenses) in respect of or arising from or out of the execution of the works or occupation of the site by the contractor”.

This must be reconciled with the Insurer, before commencement of any construction.

CAUTIONARY NOTES

It must be noted once a Claim Settlement Offer, citing Under Insurance, is made, Insurers, Loss Adjusters and or Assessors are Reluctant to significantly adjust the Offer.

Thus if a significant claim on a Policy, where No VAR Calculation was made and submitted prior to claimable event AND Under Insurance is a possibility the Urgent Appointment of a Claims Consultant is advised.