23 February 2026
Insurance is meant to be your safety net, but for some policy holders that net
unravels when it matters most.
The Non-life Insurance Division of the National Financial Ombud Scheme (NFO) says
too often, people discover after a fire, flood, or theft that the payout they receive is
far less than expected because the value of their home contents was never
updated.
Home contents insurance protects your personal belongings inside the house, such
as furniture, appliances, clothing, and jewellery. It differs from building insurance,
which covers the physical structure of the property.
Edite Teixeira-Mckinon, Lead Ombud of the Non-life Insurance Division of the NFO
said disputes arise when consumers are dissatisfied with the insurer’s settlement offer
after making a claim.
“It is important to bear in mind that jewellery appreciates, technology depreciates,
and replacement costs shift constantly. Without regular reviews, your cover may
leave you dangerously exposed, turning years of paid premiums into little more than
false reassurance,” she said.
When it comes to home contents insurance, the amount you receive after a claim is
not always straightforward. Several key factors determine the final settlement, and
understanding them can help you avoid unpleasant surprises:
Underinsurance
Underinsurance occurs when the contents are not insured for their full, up-to-date
replacement value. In such cases, insurers may apply the principle of average,
meaning the payout is reduced proportionally. To avoid this, consumers must ensure
that the sum insured ,which is the maximum payout in the event of a claim,
accurately reflects the current replacement value of all household contents. Regular
reviews of the sum insured are essential to keep it aligned with rising replacement
costs.
Replacement Value
Contents policies typically cover the replacement cost of an item, not its original
purchase price. Because most household items depreciate over time due to wear
and tear, the replacement cost is often lower than what was originally paid.
However, not all items depreciate. Jewellery, for example, may increase in value as
the price of gold and precious gems rises. Consumers should update the sum insured
to reflect these changes, or risk receiving a lower payout for valuable items.
Proof of Quantum
The responsibility lies with the consumer to prove the value of items claimed. This
usually requires proof of ownership or purchase. Older items or gifts often present
challenges as documentation may be missing. Some insurers may still settle such
claims at an entry-level value, which is usually less than the amount claimed.
Importantly, consumers must never submit false or inflated documents. Doing so
could lead to the insurer rejecting the entire claim under the total forfeiture clause,
which is standard in most policies. Even one fraudulent item can invalidate the whole claim and lead to the insurer cancelling the policy.
Dispute Over Ring Insurance Settlement
Teixeira-Mckinon cited a case study of a complainant who challenged her insurer’s
settlement after her ring was stolen. She asked for a cash payout, and the insurer
offered R59 030 based on a replacement quote from its service provider. The
complainant argued this was far below both the sum insured (R155 000) and her
jeweller’s valuation certificate (R125 000).
The insurer explained that the sum insured is only the maximum liability. If the actual
replacement cost is lower, the insurer’s obligation is limited to the replacement cost.
Since it could replace the stolen ring with exactly the same ring for R59 030, the
insurer maintained its offer was fair. To address the gap between the settlement and
the sum insured, it also offered to refund the difference in premium.
“Our office agreed that the insurer had met its duty to indemnify, in other words, its
obligation to put the complainant back in the same position she was in before the
loss. The complainant accepted the settlement and the premium refund.
“The lesson learned is that the sum insured is not a guaranteed payout – it’s the
maximum the insurer will pay. If the replacement value of an item is lower, the
insurer’s liability is limited to that amount. Consumers should regularly update
valuations and sums insured to avoid disputes and ensure the cover reflects current
replacement costs,” said Teixeira-Mckinon.
She added that insurance is not just about paying premiums – it’s about making sure
that your cover truly protects what matters most.
“Outdated valuations can leave you underinsured and facing financial shortfalls
when disaster strikes. The lesson is simple: review and update the value of your home
contents regularly.
By keeping your cover aligned with current replacement costs, you safeguard your
peace of mind and ensure that, should the worst happen, you are in a position to
recover financially,” Teixeira-Mckinon said.
Contact details for the NFO:
Telephone: 0860-800-900
WhatsApp: +27 (0) 66 473 0157
Email: info@nfosa.co.za
ABOUT THE NFO
The National Financial Ombud of South Africa (NFO) is an independent industry scheme recognised and
registered by the Ombud Council of South Africa under registration number OC/001/24.
The NFO provides free, impartial, and confidential dispute resolution services to consumers who have
complaints against financial service providers within its jurisdiction, including banks, credit providers,
life insurers, and non-life insurers.
Guided by principles of independence, integrity, fairness, accessibility, and empathy, the NFO is
committed to resolving disputes efficiently and responsibly, contributing to consumer protection,
accountability, and trust in South Africa’s financial services sector.
Issued on behalf of Priya Rajah, Communications and PR Department of the NFO by:
Yogin Devan – Meropa Communications
(031) 201 0550 / 083 326 3962
yogind@meropa.co.za
