Essential considerations in the current insurance climate

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There are three major insurance considerations for those of us based in outlying areas, namely protection against the elements, unforeseen negative events and crime.

Weather wise

The most obvious worry at the moment is drought - the worst the country is said to be facing in the last 111 years. Our water shortages are a scary reality. In the Western Cape, for example, restrictions have been implemented with the aim to save 20% of water. The province is applying to join ranks with the five other provinces already declared as 'drought disaster zones', namely the North West, Limpopo, Free State, KwaZulu-Natal and Mpumalanga.

Arid conditions can make fires all the more likely, as are unfortunately regularly seen in the Cape, for example. Recent fires have caused terrible damage, making it evident that no matter where you are based in South Africa, you need to address insurance cover against fire loss. Farmers are also facing harvesting losses as natural disasters affect crops. Luckily, these can be insured.

Changing weather patterns are a concern globally and COP21, the climate change conference held in Paris late last year, saw a new sense of urgency among governments to achieve a legally binding and universal climate agreement, with the aim of keeping global warming below 2°C. The agreement is set to be implemented in 2020.

With unpredictable weather, keep in mind as well that areas where hail is least expected or where flooding seems impossible are the very places to insure against hail and flooding. Historic risk cover endemic to any given area is not guaranteed to be sufficient these days and you must make sure you are equipped for any possibility.

A recent incident saw a farmer's 12 vehicles badly damaged by a freak hail storm. Sadly he was not insured against hailstorms, so his claims were repudiated. It is also important to insure farming equipment such as harvesters and tractors against the same risks.

Structurally speaking

Comprehensive cover extends beyond weather-related events; unexpected accidents can happen. We all remember when 14 canola silos collapsed in Swellendam late last year. In this instance, 11,500 tonnes of canola seed were spilled and, just like the domino effect of the incident itself, the costs to find alternative storage (among other factors) continue to contribute to unexpected losses. Insurance really is the secret weapon against life happening while you are making other plans.

While investigations are ongoing to determine what caused this silo accident, the reality is that structural damage needs to be factored in to your insurance policies. Medium-to-large produce producing farmers need to be covered against such losses, which can be very high if large equipment is damaged. Remember as well that buildings and equipment must be insured at the appropriate replacement value.

Staying safe

In addition to making sure structures are adequately insured, security risks should also be a consideration. No matter where you are in the country, be it more secluded in a rural area or living in suburbia or in the city, sufficient security is of course advised, even though at your discretion.

Your chosen security fittings, however, are very important in an insurance policy. If, for example, an alarm or security gate are specified to exist on the property, they must have been in use at the time of an incident for a crime claim to be settled. It is important to remember that the reality must match your insurance policy.

It's a good time of year generally to review your current cover all round. Making sure you are prepared for the unexpected will bring you peace of mind for the year ahead.