We’ve all experienced that feeling: “I had an accident, submitted my claim to the insurer, what now? My payout is far less than expected. I feel frustrated and disappointed”
Many insurance clients don’t understand that you as the client are responsible for providing the correct sum insured amounts. The sum insured amount directly impacts your payouts —and if it’s inaccurate, you could be under-insured or over-insured without even knowing it.
To make it easier to understand, let’s use a real-world example:
Imagine you bought a Toyota Hilux for R563,200 in 2020 and insured it for that amount. You’ve been faithfully paying your premiums every month, never skipping a beat, and never had to claim… until 2025. One unfortunate day, you’re in the wrong place at the wrong time, and just like that — your vehicle is stolen.
It’s something terrible, but unfortunately, all too common in South Africa. You breathe a sigh of relief, knowing you’re insured. You’ve done everything correctly, so you expect a fair payout to replace your beloved bakkie.
Then comes the shock: your insurer only pays out R300,000.
Here’s the catch: vehicles depreciate over time — and unless you updated your insured amount regularly, your policy may reflect outdated information. On average, a car loses 15 – 20% of its value in the first year Followed by another 10 – 15% each year after that. So, by year five, your Hilux may very well be worth R300,000 or less, depending on mileage, condition, and the current market.
When it comes to car insurance (and most other insured items), the type of value to determine your sum insured makes a huge difference. Let’s break it down:
The amount you would likely receive if you sold the car privately. It considers mileage, condition, service history, and demand.
The amount a car dealer would sell your car for on the showroom floor. Usually higher than market value.
The amount a client and an insurer agree to insure a vehicle for. This is usually done through a valuation certificate. The Insurer will request confirmation of value to agree to the determined value as the sum insured value.
When you take out insurance, you determine:
We’re here to help guide you—but we can’t determine the sum insured amounts or values.
Taking the time to ensure your sum insured amounts are accurate and regularly updated, while choosing the right value type for your needs, is crucial! This way, when the unexpected occurs, you’ll receive the payment you desire.
At Navigate Financial Services (Pty) Ltd, our team of experts are always here to guide and assist you. Please do not hesitate to reach out for personalised advice and support. We look forward to assisting you.
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