Underinsurance is one of those insurance terms that doesn’t sound too scary, until it hits your pocket. It’s a key principle that can directly reduce your payout if you’re not covered for the full replacement value of your belongings. Knowing how it works, and how to avoid it, is essential to keeping your cover reliable.
What Underinsurance Actually Means
Pineapple’s policy is clear: “It is the Policyholder’s responsibility to insure all your items for their replacement value.”
Replacement value = what it would cost you to replace your belongings as new today, not what you paid for them years ago.
You’re underinsured if the amount you choose as your Compensation Limit (the max payout on your Policy Schedule) is lower than the true replacement value.
How It Impacts Your Claim
If you’re underinsured at the time of a loss, Pineapple applies the principle of average. In plain terms, Pineapple pays out only the percentage you were covered for and you cover the shortfall.
Example from the policy:
You insure your household contents for R80,000.
A burglary results in a loss worth R30,000.
Pineapple’s assessment shows your actual contents are worth R100,000, not R80,000.
You were 20% underinsured.
Result: Pineapple pays 80% of the claim (R24,000), and you absorb the remaining R6,000 (plus your excess).
Even if your claim amount is less than your insured total, underinsurance on the overall value still reduces what you’re paid.
How to Avoid Underinsurance
Review your values regularly: Prices rise with inflation and new purchases add up. A fridge you bought for R6,000 three years ago might cost R10,000 today.
Update your cover: If your contents, jewellery, or valuables increase in value, ask Pineapple to adjust your Compensation Limit.
Keep proof: Store receipts, valuations, and records of high-value purchases. They’ll make claims easier and ensure accurate valuations.
Underinsurance shifts part of the risk back onto you. By keeping your insured values up to date and aligned with today’s costs, you make sure your cover delivers the full protection you expect when something goes wrong.
*The information provided here is for informational purposes only. For the full terms and conditions, please consult your policy wording.