Consumers who have not updated their short-term insurance this year are in for a shock - they won't be adequately protected against rising replacement costs.
The risk of accidents and theft traditionally increase during the festive season as people go on holiday - leaving their property and assets unattended.
Lourens Joubert, head of corporate and commercial underwriting at Santam, said in tough economic conditions it was important for people to ensure that their assets are adequately protected against rising replacement costs and to adjust their insured values in accordance with inflation.
"And for businessmen who import assets - plant, machinery and equipment - the volatile currency makes it even more crucial to ensure that their insurance values are accurate."
He said most insurance policies on commercial assets based the indemnity on the new replacement value of assets.
"Most policies refer to the 'average clause'. If a business property is insured for R500000, but at the time of the loss it is established that the new replacement value is R1 million, all claims will be reduced by 50 percent.
"The simple explanation is that, as the insurance company effectively only received 50 percent of the premium - based on the new replacement value - it will only pay 50 percent of any loss."
Joubert said that it was critical to ensure that the sums insured were adjusted at least yearly to compensate for rising inflation.
"The value or cost of an item generally increases with inflation each year. If you insure your premises for the correct amount in January and the loss occurs in December, the value will be too low, and this could be reflected in the payout you receive."