Underinsurance is one of the most common (and costly) pitfalls in insurance. It might sound technical, but at its core, it simply means you’ve insured your stuff for less than it would actually cost to replace. And when that happens, even a small claim could leave you out of pocket.
What is Underinsurance?
Underinsurance occurs when the Compensation Limit (the value you choose in your Policy Schedule) is less than the true replacement value of your belongings.
Replacement value = what it would cost to buy new, equivalent items today.
Underinsurance doesn’t just mean “less cover”, it means smaller payouts even when the claim is well within your limits.
Pineapple makes it clear: “It is the Policyholder’s responsibility to insure all your items for their replacement value.”
So if your household contents are worth R100,000 in today’s market, but you only insured them for R80,000, you’re underinsured by 20%.
How Underinsurance Impacts Your Claim
When underinsurance is discovered at claim stage, Pineapple applies the principle of average. This means you’ll only be compensated for the proportion of insurance you actually bought.
Example from the policy:
You insure your household contents for R80,000.
A burglary results in losses worth R30,000.
Pineapple assesses that your belongings were actually worth R100,000 before the burglary.
Because you were underinsured by 20%, you’ll only get 80% of the claim value: R24,000 instead of R30,000 (before the Excess deduction).
Even though the stolen items were valued at less than your total insured limit, underinsurance still reduces your payout.
Avoiding Underinsurance
The good news? Underinsurance is avoidable with a bit of proactive effort.
Review Values Regularly
Inflation drives up replacement costs every year. That fridge you bought five years ago might now cost double to replace.
Update Your Cover Promptly
Bought a new smart TV, jewellery, or gaming console? Make sure your Compensation Limit reflects the new total value.
Document Your Purchases
Keep receipts, valuations, or photos of high-value items. These help Pineapple verify replacement costs and ensure smoother claims.
By keeping your Compensation Limit aligned with reality, you’ll ensure your Pineapple policy delivers the financial protection you expect when life throws you a curveball.
*The information provided here is for informational purposes only. For the full terms and conditions, please consult your policy wording.