High-value assets insurance needs accurate values, not a generic sum insured.

All risks, specified items and the limits that catch people out

Personal insurance separates possessions into two categories, and the distinction decides most disputed claims. Household contents cover applies to items while they are inside the insured residence. All risks cover applies to items that leave it - jewellery worn away from home, watches, cameras, laptops, sports equipment, handbags and mobile devices. An item lost at a restaurant or on holiday falls outside the contents section entirely, regardless of how comprehensively the house is insured.

All risks is itself divided. Unspecified all risks provides a single sum for ordinary portable items, almost always with a single-article limit that is far lower than the total - a R100,000 unspecified sum with a R15,000 single-article limit pays R15,000 for a stolen watch worth R80,000. Specified all risks lists each item individually with its own sum insured and is the only sensible basis for anything of real value.

Contents sections apply their own internal sub-limits in the same way. Jewellery, watches, works of art, collections, silverware and cash are typically restricted to a percentage of the contents sum insured or to a stated rand figure, whichever is lower. A family with R2 million of jewellery in a safe at home may find that the contents section caps jewellery at R150,000, and that the balance was never insured at all.

Items that should normally be specified individually:

• Jewellery and watches above the single-article limit.
• Fine art, sculpture, antiques and limited-edition pieces.
• Collections - wine, stamps, coins, firearms, memorabilia and rare books.
• Musical instruments, particularly those taken to performances.
• Photographic, drone and professional recording equipment.
• Sporting equipment such as bicycles, golf clubs and diving gear.
• High-specification laptops, tablets and mobile devices.
• Furs, designer handbags and other items with a distinct resale market.

Valuation: the evidence that decides the settlement

For most high-value items the insurer's obligation is to indemnify - to place the insured in the position they occupied before the loss, no better. What that means in rand is established by evidence, and the burden of producing it falls on the claimant. A specified sum insured is a maximum the insurer will pay; it is not an admission that the item was worth that much.

The consequence is that a valuation is not an administrative formality. Without a professional valuation, a stolen ring is settled on whatever the loss adjuster considers a comparable item costs, and the claimant is arguing from photographs and memory against a professional working from trade pricing. With a current valuation from a qualified valuer, describing the item in detail with metal purity, stone weights, clarity, colour and cut, the discussion is materially shorter and materially more favourable.

Agreed value is the alternative and is preferable for items whose worth is not readily established by reference to a retail market - fine art, antiques, classic vehicles and rare collectibles. Where an agreed value is accepted by the insurer at inception, that figure is payable on a total loss without further argument about market value. It requires a supporting valuation and it usually requires re-agreement at intervals, but it removes the single largest source of dispute.

Valuations date quickly. Gold, platinum and diamond prices move, the rand moves, and the art market moves independently of both. A valuation more than three years old should be treated as unreliable, and jewellery valuations are commonly required to be refreshed every two to three years as a condition of cover.

What a usable valuation contains:

• The valuer's qualifications, professional association and independence from the sale.
• A detailed description sufficient to identify the specific item, not a category.
• For jewellery, metal and purity, stone weights, clarity, colour, cut and any certification numbers.
• For art, artist, title, medium, dimensions, date, provenance and condition.
• The basis of valuation, whether replacement, market or agreed value.
• The date, and photographs of the item from multiple angles.
• A copy stored off-site or in the cloud, not only in the house that may burn down.

Security warranties and the conditions that defeat a claim

High-value policies impose security conditions, and those conditions are enforced. A safe warranty requiring jewellery to be kept in a specified safe when not being worn means precisely that: an item left in a bedroom drawer overnight is outside the terms on which the insurer accepted the risk. Alarm warranties commonly require the alarm to be armed whenever the property is unoccupied and to be linked to an armed response provider with a valid contract. Some policies additionally require an annual service certificate.

The difficulty in practice is not that these conditions are unreasonable - they are the reason the cover is available at all - but that they are agreed at inception and then forgotten. An armed response contract lapses, a beam is disabled because a pet triggers it, a safe is installed but not bolted down as specified, a security gate is left unlocked during the day. None of these is deliberate, and each of them can defeat a claim.

The Policyholder Protection Rules made under the Short-term Insurance Act 53 of 1998 constrain how far an insurer may go. Rule 6 restricts void and voidable provisions, and an insurer may not reject a claim for breach of a term unless the breach is causally connected to the loss or the term is material and the insurer has complied with the disclosure requirements. That protection is real, but it is not a substitute for compliance. A jewellery theft from an unlocked house is causally connected to the unlocked house in a way that is difficult to argue around.

The practical response is an annual security audit against the schedule: read the warranties as written, physically verify each one, and either comply or ask the insurer to vary the term in writing before the loss occurs.

Source: Short-term Insurance Act 53 of 1998, read with the Policyholder Protection Rules (Short-term Insurance), 2017, including Rule 6 (void provisions) and Rule 11 (disclosure).

Ownership structures and insurable interest

Wealth in South Africa is frequently held through trusts, companies and shared family structures, and the insurance schedule often fails to keep up. A policy in an individual's name over a residence registered in a family trust, or over artwork owned by an investment company, creates a mismatch between the insured party and the party who actually suffers the loss.

South African law requires the insured to have an insurable interest in the property - a recognised patrimonial interest such that they stand to be prejudiced by its loss. The courts have taken a substantive rather than a technical approach to this, and in Lorcom Thirteen (Pty) Ltd v Zurich Insurance Company South Africa Ltd the Western Cape High Court considered the interest of a shareholder in property owned by the company, confirming that the enquiry is directed at genuine patrimonial interest rather than at formal title alone.

That is reassuring, but relying on litigation to establish the point is an expensive way to insure a house. The correct approach is to name every entity that holds an interest - the trust, the company, the individual and any bondholder - and to confirm that the policy schedule reflects the current position. Structures change more often than schedules do: a property is transferred into a trust, a business is incorporated, a bond is registered or discharged, an asset is inherited. Each of those is an insurance event as well as a legal one.

Related record-keeping obligations follow from the same structures. FICA verification for the entities involved, and the treatment of household staff under the Compensation for Occupational Injuries and Diseases Act, are both routinely overlooked in family arrangements.

Source: Lorcom Thirteen (Pty) Ltd v Zurich Insurance Company South Africa Ltd 2013 (5) SA 42 (WCC); Financial Intelligence Centre Act 38 of 2001.

Worldwide cover, travel and cross-border movement

Specified all risks cover is frequently written on a worldwide basis, but worldwide is subject to conditions that are easy to breach without realising it. Many policies limit cover outside South Africa to a stated number of days in any period of insurance, commonly sixty or ninety days. An item that lives abroad - jewellery kept at an overseas property, or a work of art on long-term loan to a gallery - has exceeded that limit permanently.

Movement itself is where losses cluster. Items in transit, in a hotel room, in checked baggage or in a vehicle attract specific exclusions in most wordings. Jewellery and electronic equipment in unattended checked luggage are commonly excluded outright, and theft from a vehicle is usually restricted to a locked boot with visible forced entry and often carries a reduced sub-limit. Carrying valuables in hand luggage is not a preference; it is frequently a condition of cover.

Cross-border considerations extend beyond the policy. Exchange control approval may be required for taking valuables of significance out of the country, customs declarations on departure prevent a dispute about import duty on return, and the temporary export of works of art may engage the National Heritage Resources Act where the item is a protected heritage object. None of these is an insurance question directly, but each of them affects what happens when an item does not come back.

Collections: pairs, sets and the loss of one item

Collections raise a problem that individually specified items do not. Where an item forms part of a pair or a set, the loss of one piece frequently destroys value well beyond that piece - a single earring, one chair from a dining suite, one volume from a bound set, one painting from a diptych. A pair and set clause addresses this by providing that the insurer will pay a proportion reflecting the reduction in value of the whole, rather than the standalone value of the item lost.

Whether the policy contains such a clause, and how it is drafted, should be confirmed for any collection of consequence. Its absence can turn a substantial economic loss into a modest settlement that is technically correct and commercially useless.

Two further collection issues deserve attention. Growth provisions matter, because collections are acquired continuously and an item bought in March is uninsured until it is added to the schedule - an automatic acquisition clause providing cover for newly purchased items for a stated period, subject to notification, closes that gap. And restoration is often more relevant than replacement: for damaged art or antiques the policy should address the cost of professional restoration and, where restoration leaves a residual reduction in value, whether depreciation in value is recoverable.

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