According to research completed by short-term insurer Santam, some 40 percent of short-term insurance policyholders are under-insured by up to 45 percent.

Caroline da Silva, head of portfolio management at Santam says, "This means in terms of the insurance contract, a policyholder will only receive partial compensation after submitting an insurance claim.

Hit by a burglary

As an example, if the replacement value of your house contents comes to R200 000, but the sum insured is just R110 000 and during a burglary R20 000 worth of goods are stolen, only R11 000 will be paid out to you.

This is because you are underinsured by 45 percent and therefore only 55 percent of the loss is paid out.

"No-one wants to come up with cash when they are experiencing a traumatic time. Under-insurance can put people under severe financial strain."

The problem is that most people fall into the trap of under-insurance because they are unaware of the main pitfalls, Da Silva says.

Insuring your entire home?

Due to the fact that crime is top of mind for many when insuring, you often insure only for what you think may be stolen in the event of a burglary. Insurance will however cover you for far more than crime, so it's not a bad idea to insure for what it would cost you to replace everything you own should your house burn down in a fire.

"Not insuring your assets at the correct replacement value is one of the main mistakes people make. The sofa that you bought five years ago for R1500 might now cost R3000 to replace. The contents of a house are insured at replacement value (vehicles are insured at market value). Therefore, you have to revise your policy at least annually to make sure that your cover remains adequate.

"Policyholders should also immediately add new purchases and gifts to their policy.

Professional broker

"When insuring the actual bricks and mortar of your home, bear in mind the current day building costs since it is those costs that will be incurred when repairing damage to your home."

Da Silva concludes that you can either draw up an inventory yourself or employ the services of a professional broker who will be able to assist in a valuation of house contents.