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How to pay less for insurance when money is tight

Published Feb 18, 2022

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For many South Africans, it’s a financial nightmare out there right now. They’re being battered by a triple whammy of rising interest rates, increasing inflation and less take-home pay in real terms.

DebtBusters’ Q4 2021 Debt Index found that with no increase in real income levels since 2016, consumers continue to supplement their earnings with unsecured credit. And according to TransUnion’s latest Consumer Pulse Survey, more than half of South African consumers (55%) say their household income is still being negatively impacted because of Covid-19.

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But when you’re on the ropes financially, with no more credit available, where do you cut? As consumers look to cut costs out of their budgets, short-term insurance premiums are often an easy target – but that could just bring further financial pain down the line if disaster strikes while you’re not covered, says King Price’s client experience partner, Wynand van Vuuren.

“Insurance is not a ‘nice-to-have’. It’s absolutely critical to protect yourself from a range of risks, especially in a time of crisis. Insurance makes the difference between recovering from an accident or disaster, or possible financial devastation. If your finances are under pressure right now, the most important thing is to talk to your insurer to see what you can afford,” says Van Vuuren.

Here are King Price’s top 5 tips to get the best possible deal on your insurance, and save some money in the process.

1. Review your current cover

Go through your insurance policy 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? Establish your actual risks, and cover those.

2. Shop around

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Don’t settle for the first quote you get. You’d be surprised by how much premiums can vary between insurers for the same car, buildings and home contents cover, says Van Vuuren. “Or find yourself an insurer that offers premiums that decrease monthly as your car loses value.”

3. Review your excess

Your excess is the first amount payable on any claim. Generally, the higher the excess you choose, the lower the premium you pay. But choose carefully, because you still need to be able to pay the excess amount if you claim.

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4. Combine your policies

Insurers love clients who have more than one policy with them. So, if you cover your house contents and a car with the same insurer, 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.

5. Reduce your risks

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Insurers base your premium on your risk – so by demonstrating lower risk, you can save money. You can reduce your risk (and your premiums) by installing additional security measures like electric fencing and an alarm system linked to armed response, for example.

“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.

PERSONAL FINANCE

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