Emergency assist
Q & A

Mutual & Federal answers your questions

At Mutual & Federal we believe it's important that all our policyholders understand exactly what their insurance does and does not cover – without having to wade through pages of small print and industry 'jargon'. In this section we answer your questions about some of the more complicated insurance terms and clarify these with helpful examples.


Q. What does it mean to be under insured?

A. Under-insurance means you do not have adequate insurance to cover the full replacement value of the assets you have insured.  For example, let's say you insured your household contents for R80 000 and your house is broken into.  Goods with a replacement value of R30 000 are stolen which you claim under your Home Contents policy with Mutual & Federal.  Following assessment, it is found that the current replacement value of your total Household Goods before the theft was actually R100 000 and not R80 000 as insured. This means that you were underinsured by 20% and we will pay only 80% of your claim, i.e. R24 000 and not the R30 000 claimed.

Q. What is replacement value?

A. The replacement value of goods is what it would cost you, at the time of a claim, to replace all your belongings with similar brand new ones. If you submit a claim, your insurer will calculate the replacement value you should have insured yourself for. If you insured your belongings for less than that, your insurer will only pay a part of your claim and you will be responsible for the difference.

Q. What is Insurable Interest?

A.  To have an insurable interest in an item, you would stand to suffer direct, measurable, financial loss if the item were lost, damaged or destroyed.  For example, your TV set to the value of R2 000 has been stolen from your home. As the owner of the TV you have suffered a measurable loss of R2 000 because you have a financial (insurable) interest in the TV set.

Q. What is Indemnity?

A.   The principle of indemnity is the basis of most short-term insurance contracts. This principle states that after a loss has occurred, the insured shall as far as possible be placed in exactly the same financial position as he was before the loss occurred, subject to adequacy of sum insured and all policy conditions and requirements being fulfilled. As your insurer, we indemnify you for any losses covered under your policy (subject to the above conditions).

Limit of indemnity is the maximum amount of indemnity provided by a policy. The limit of indemnity is determined by the sum insured and constitutes the insurer's maximum liability in respect of any one event or series of events. The limit of indemnity is the amount upon which the premium is usually calculated.

Q. What does Betterment mean?

A.   If the settlement of your Claim results in you being in a better financial position than you were before the loss occurred, the extent of the improvement to your position is known as ‘betterment’.  If this is the case, you would be expected to contribute towards the Claims settlement. For example, let’s say your sound system was destroyed in a fire and a replacement similar to the system you had would be R5 000. You prefer to upgrade the sound system to one with value of R7 000. The R2 000 difference in price constitutes betterment and would be your own account.

Q. What is Consequential Loss?

A.   This refers to loss or damage that results in further ‘indirect’ losses.  For example, if a water pipe bursts, the consequential loss would be an unusually high water bill.

Q. Why do I have to pay an excess if I claim?

A.   An excess (also known as a deductible or first amount payable) is basically an underwriting fee charged to minimise the number of small administratively expensive claims, or to reduce a loss ratio, and to impose a duty of care on the insured. Excesses are usually charged either as a percentage of the claim, or as a fixed amount.   For example, you have lost your watch to the value of R800 and the excess applicable is R200. The claim will be settled for the amount of R600.

However, if a burst pipe results in damage of R375 to a ceiling and the excess applicable is R500, the cost would be for your own account because it is less than the R500 excess.

Q. If I can't pay my premium for a month, will I still have cover?

A.  Your policy must be paid monthly in advance on the agreed date stated in your policy schedule.  It is your responsibility to ensure that there are sufficient funds in your bank account so that the debit order can be processed.  If no premium is received on the agreed date, we will make a further payment request within 15 days.  If payment is still not received within this period, your policy will be cancelled and you will have no cover for the time you did not pay. Non-payment of your policy during the first month after cover has begun will result in your policy being cancelled automatically.  If you cancel or reverse your debit order, this will also mean that you have cancelled your policy and you will not have cover.

Q. What if my policy information changes?

A.  Changes of information could affect your cover and your premium, so you should inform us of them immediately.  Some examples are moving to a new residence, changing the regular driver of your insured motor vehicle, convictions for offences relating to dishonesty (against you or someone covered under your policy) and getting tenants to rent your property.

Q. How can I avoid being under insured?

A.  We recommend that you assess the value of your home contents regularly to ensure that you are covered for the correct amount.  Bear the following in mind:

  • The replacement values of goods change over time.
  • If your policy is not reviewed and the higher replacement value is not taken into account, cover becomes inadequate.
  • You – or an expert – need to make a realistic estimate of the true replacement value of your insurable assets, equipment etc.
  • Update your household inventory list and list of other assets on a regular basis to ensure that any new items are included and remove items that that you no longer have.

Tips for completing a Household Inventory

  • Move methodically from room to room in your home, and assess item by item.
  • Record the make, models and serial numbers of major household appliances. Retain your original purchase documents such as invoices and operating manuals.
  • Most policies limit cover for expensive items such as jewellery, artworks, stamps and coins, furs, rugs and loose carpets. You may need to insure these items separately with a Specified Personal Goods policy.
  • To determine the value of the items it may be easier to use the store catalogues, or to visit an online shopping site.

Once you have completed the inventory form, submit the form to your broker or insurer as a permanent record of your current value at risk. A video recording or photographs makes it easier to record and identify your household items. Your inventory should be updated annually or alternatively periodically when you acquire additional household goods.


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