Reviewing your short-term insurance – Ways to stay covered on a tight budget
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The combination of Covid-19 and tough economic times have dealt the finances of ordinary South African a body-blow. Nearly two-thirds of consumers have seen their household income fall during the pandemic, and less than half think they will fully recover in the next 12 months, according to TransUnion research. Four in 10 are battling to pay their bills.
That’s why it’s vital that you do a thorough review of your short-term insurance portfolio to see that you’re getting the best value for your money, while ensuring you have peace of mind that your car, home and belongings are fully protected going into 2022.
King Price’s client experience partner, Wynand van Vuuren, says there are several ways you can make sure your insurance covers your risks on a tight budget.
Know your risks
The starting point for effective insurance cover is to know where you and your family are most vulnerable to loss or damage. If you had a car accident, or your house was damaged in a fire, how would you recover? Can you cover the costs yourself if something were to happen?
“For example, many people cut back their car insurance to third party, fire and theft – but that means you won’t be covered for accident damage, which is the most frequent loss that we see,” said Van Vuuren.
Review your current cover
Go through your insurance schedule line by line. Are you paying for assets you don’t even own anymore? Do you insure jewellery that’s kept in a safe and never worn out of the house? Do you have shortfall cover on cars that are paid off? Are your cars a year older, but you’re still paying last year’s premium? Do you work from home, and your house is always occupied?
By demonstrating lower risk, you can save money. You can also reduce your risk (and your premiums) by installing additional security measures like electric fencing and an alarm system linked to armed response.
Update your details
If your personal circumstances have changed in any way in the past year, it’s critical that you update your insurance accordingly. These details could have a major impact on your premium. This includes the correct addresses for where your car is parked, both during the day and at night, and that your insurer knows how much mileage you do in an average month.
Check your home contents cover
The key is to make sure that you cover your home contents for their current replacement value, not what you paid for them. High-value items that are only kept in the house are covered under your home contents policy. But the moment you take any high-value items outside the house, they must be included under your portable possessions cover, or they’re effectively uninsured. That includes your phone, laptop, jewellery, watches and sunglasses, clothing, your gym bag and its contents, and luggage, for example. To help you value your home contents correctly, here’s a handy home contents inventory.
Is your house fully covered?
A building’s market value isn’t the same as its insured value. Work out what it would cost to rebuild your home if you had to, and insure that amount. Buildings insurance should cover what it would cost to rebuild your property from the foundations up, including your boundary walls, solar panels, swimming pool, taps and tiles. And if you’ve made major improvements to your home, such as adding a new room, tell your insurer, or risk being underinsured.
Combine your policies
Insurers love clients who have more than one policy with them. So, if you cover your house contents and a car, for example, you’ll probably pay less. You’ll also benefit from a multiple car discount if you cover two or more cars – up to 20%, in some cases.
“There are lots of relatively easy ways to cut your insurance costs, without giving up your insurance and leaving yourself exposed. Even small amounts all add up. Then you can redirect those savings into something that pays off debt,” says Van Vuuren.