GUIDES: Get clued up on insurance
It’s helpful to know what to look out for when scouting around for the ideal short-term insurance plan. Standard Insurance Limited has put together answers to common enquiries from our wealth of knowledge, to help get you clued up on insurance before signing on any dotted lines.
When buying insurance compare ‘like for like’
Many people assume that all insurance products are the same, so the will simply compare them based on price- don’t do this. When buying insurance, make sure to compare ‘like for like’, as there are many benefits that may or may not be included in each policy, they may also have different limits. First, compare what’s covered, then compare the limits of that cover. Make reading through your policy documents a habit, so that you thoroughly understand what you’re paying for.
Higher premiums vs lower excess, and vice versa
You need to determine what excess you can afford to pay, as a higher excess usually decreases your monthly premium. An easy way to put this into perspective is to ask yourself: if you were in an accident, would you be able to pay R3000 or R5000 for repairs? This will be an out-of-pocket expense but increasing this amount will bring down your monthly premium. So, do you pay more every month as a premium for lower excess, or less and then have a higher excess if needed?
What’s the deal with bundling?
Bundling is when you insure everything from vehicles, building and home contents with a single insurer. This helps to simplify the management of your insurance and will likely get you a discount on your monthly premium. If you choose to bundle, make sure that you have sufficient cover for all your assets. If not, it’ll be better to get separate policies.
Why is it important to specify your items?
Items that you regularly take out of your home should be covered in case of loss, theft or damage. These items must be individually specified so they can be covered appropriately, as if they aren’t, they could be excluded from the cover.
Why does the cost of insurance go up over time?
- There’s no simple answer to this, as insurance premiums increase because of several factors:
- Inflation impacts your premiums.
- The number of claims you lodge is a factor – if you claim often the insurer considers you a higher risk and could then increase your premium.
- The cost of parts, paint and labour often go up as your cars’ value decreases, making repairs more expensive, which leads to requiring an increase in car insurance premiums.
- Your risk factors could change over time- where you work or live may become riskier and the insurer might then increase you premium.
Why is honesty the best policy when it comes to insurance?
It’s important to answer all your insurer’s questions truthfully and accurately, as they will assess your risk mostly based on the answers you provide when taking out a policy. However, this is changing as insurers can now tap into other sources of information to validate some of your answers. If they have not been verified before they will be when you make a claim, if false information was provided your claim may be denied or only partially paid out.
What to keep in mind before cancelling your insurance?
The aim of insurance is to protect you against unplanned risks, so before cancelling, ask yourself if you can afford to repair or replace an asset should anything happen to it. Extreme events could end up financially crippling you and your family without insurance. You might cancel because you’re in a difficult financial situation, but instead of completely getting rid of your insurance consider decreasing the benefits first. You could also consider insuring all your assets with one insurer, as it may work out cheaper or increasing your excess will also decrease your monthly premium.
These are just some of the questions that people have when it comes to understanding different insurance policies and products. It’s important to know what your insurance policies cover, as well as what they don’t. When in doubt, or even just to verify what you know, it is always a good idea to speak your financial advisory and insurance broker about your policies. It is important to be clued up so that you can protect what matters most to you.