From level 6 weather warnings to El Niño occurrences, severe weather has become a recurring feature of our time. Experts and commentators have attributed the root cause of the troubling trend to the pervasive impacts of global warming and climate change.
Old Mutual financial education head John Manyike said failure to get adequate insurance protection could lead to dire consequences, including the permanent loss of homes and livelihoods.
He said South Africans should manage the risks associated with their homes by having an appropriate insurance cover.
“With the increase in disasters like veldfires and flooding, it is important for all South Africans to ensure that the risks relating to their homes are managed where possible.”
According to data and research from Old Mutual Insure, the average annual catastrophe claims over the past decade (2012 to 2022) have been 10 times higher compared to the period between 2000 and 2011.
Manyike warns: “It’s hard to predict whether or not these erratic weather conditions will worsen but according to experts, unpredictable weather patterns are likely to be common due to climate change.”
He said that having adequate risk cover was therefore an important building block in terms of protecting assets and managing finances.
“Insurance acts as a safety net, providing crucial protection for your assets and financial well-being. For example, without insurance in place, when disaster strikes, you may be forced to opt for a personal loan, which attracts interest when repaying.”
Old Mutual Insure spokesperson Lizo Mnguni said that if you were unsure about where to start, homeowners and policyholders could work with their brokers or insurers to ensure there was adequate cover in place for floods, for example, which could sometimes be excluded by certain wordings.
“First, familiarise yourself with the dangers associated with changing weather patterns and extreme weather events, and then take action to help mitigate the worst effects of the weather patterns on your policy provisions, buildings and contents.
“It is important to understand that insurance provides cover against specific insurable events, and one cannot claim for things like a damaged ceiling due to excessive rainwater that has leaked into the roof from gutters being clogged up.”
Risk cover remains essential even when money is tight because it:
· Protects your financial stability: Risk cover, such as insurance policies, shields you from the financial burden of unexpected events. Without it, you may be forced to deplete your savings or take on debt to cover losses.
· Guards against catastrophic losses: Without risk cover, a single significant event, like a natural disaster or a major accident, could lead to devastating financial consequences. Insurance can help mitigate the losses.
· Preserves long-term financial goals: Maintaining risk cover allows you to stay on track with your long-term financial objectives, such as saving for retirement, education or homeownership.
· Prevents the snowball effect: One crisis can lead to a cascade of financial difficulties. For instance, if you experience a significant loss without insurance, it can impact your ability to meet other financial obligations, creating a domino effect.
· Ensures peace of mind: Knowing that you have appropriate risk cover in place provides a sense of security and peace of mind. The mental reassurance is invaluable, especially during challenging times.
· Preserves assets and investments: If you’ve worked hard to build assets or investments, risk cover helps protect the valuable resources, ensuring they remain intact for future use.
· Enables recovery and rebuilding: In the event of a loss, insurance can expedite the recovery process. It provides the financial means to repair or replace damaged assets, allowing you to move forward more quickly.
While it might be tempting to cut costs during tight financial periods, risk cover should not be sacrificed. It is a fundamental component of responsible financial management, providing vital protection against unforeseen events that can have long-lasting consequences.
It is wise to work with a financial adviser or insurance professional to tailor your coverage to your specific needs and budget.