It is a good thing to be aware of the ‘average’ clause in a policy which companies can apply if they can prove that you have been drastically under-insured. Indemnity insurance in particular is something to be carefully scrutinized.

In the event of you having to put in a claim they will pay out substantially less than the insured amount.

For example if your house is insured for R200 000 but the company can prove that your home is worth, say R300 000 you will find that you are under-insured. If you then claim for damages of R40 000 they may decide that you must carry some of the loss and will pay out just over R26 000 which is about 66% of the claim, and the same law of averages can also be used as a yardstick for under insured claims.

It is not a good idea to underinsure your valuables as this could only lead to trouble. But on the other hand over-insuring will only prove to be wasteful and unnecessary as claim pay outs will only replace at the value of the goods  – in other words at current retail prices. With an indemnity insurance policy from a reputable insurance company this can avoided.

For example if you have goods that need to be replaced and the goods are R6 000 and the replacement is only R5 000 this is what the insurance company will pay out as per the indemnity insurance contract.

It is best to do a regular inventory of your goods, and utilizing the services of a professional evaluator might be beneficial if you need accuracy on the value of your assets. It is through this that you can get the best out of your indemnity insurance.

1.         General liability: This insurance not only protects you if anyone is injured at your place of business, but it also covers any injuries that might be caused by a product or service which you sell.

2.         Umbrella liability: This insurance fills in any gaps left by all your other forms of insurance and ensures you won’t be stuck with a big bill.

3.         Property: As you wouldn’t think of going without a homeowner’s policy, you also need to insure your business property.

4.         Risk management:  Exposure to risk is something that needs to be thought about in detail, as every day you and your business will face some form of liability or risk -from a client slipping and injuring themselves on your premises to one of your employees causing damage to property of a client or third party.

5.         Public Liability: Claims by consumers and the public can be incredibly high, high enough to literally put an end to your business. With the correct cover in place any unfortunate and unforeseen problems that can lead to a claim against you or your business.

Mo matter what type of business you are engaged in – whether it be a shop an office or even a hotel – it’s likely that the contents of that business will run into tens of thousands, if not more. So look for the best business insurance South Africa can offer when looking for cover.