Underinsuring your technology valuables: A BIG mistake

Santam believes one of the biggest mistakes business owners can make is to underinsure their valuables.

Louise Pharo: Santam head of commercial business

South Africa's leading commercial insurer, Santam, has over 93 years experience in protecting companies against risks and the insurer believes that to underinsure valuables is one of the worst mistakes that companies can make. "Policyholders often fall into a trap of underinsurance because they are unaware of the repercussions. If your equipment is worth R500 000 and you only insure it for R400 000, only 80% of your loss will be paid out if you have a legitimate claim in terms of your policy wording. The last thing you need is to have to find additional funds following a loss to make up any shortfall, so it is critical to ensure that the value of your possessions is updated regularly," says Louise Pharo, Santam's head of commercial business.

Santam urges business owners to take time to appropriately determine the real value of their investments to guard against underinsurance dangers, or to use a broker to assist in the process. The company has also developed online risk calculators and methods that will help you and your broker correctly insure your business.

1. Work with a broker to determine your business needs and to help you appropriately value your possessions.
2. Review your insurance at least once a year to add or remove items that you may have acquired or disposed of.
3. Take depreciation into account and adjust your sums insured to reflect the appropriate amount. In the first seven years electronic equipment should be insured for the new replacement value (i.e. cost to replace the equipment with equipment with the same performance and capacity) and thereafter for the reasonable market value.
4. Remove items if they are stolen or lost and replace these on the policy contract with the new items, provide a full description of the items, including make, model and serial number, where applicable.
5. Keep invoices for equipment and valuables bought so that the claims process can be managed easily in the case you need to claim.
6. Provide detailed specifications of hardware and software when insuring computers and mobile equipment.
7. Draw up a detailed inventory yourself or request the assistance of your broker, who will be able to assist you in valuing your valuables.
8. Cover is available for the reinstatement of your data as well as increased cost of working following a loss or damage to your electronic equipment. Kindly enquire with your broker to ensure you are adequately covered.