CONSUMERS DON'T HAVE TO SIT BACK AND ABSORB INSURANCE PREMIUM HIKES
Friday, September 13, 2013
Although various indicators are pointing to short-term insurance premium increases in 2014, consumers don’t have to just sit back and absorb them. There are things – within their control – that can be done to offset imposed premium increases.
Auto & General’s CEO, Leon Vermaak, says consumers could even enjoy reductions on their premiums by making some changes.
“South Africa’s weakening currency, the number of recent local natural disasters and the increase in vehicle accidents have put the insurance industry under pressure to implement premium increases. However, consumers have some power to resist the blow to their budget by putting into play some strategies that could help them actually lower their premiums,” says Vermaak.
This is his checklist for saving on insurance:
- Insure your vehicle for the correct value: Drivers of older vehicles must ensure that they are not over-insuring their cars. While Auto & General Insurance takes into account the vehicles depreciated value, not all insurers do, so make sure your vehicle is insured for the correct value.
- Update your home contents policy: When it comes to home contents insurance, opportunities to reduce coverage could lie in carefully and regularly updating household inventories. Review your household inventory every six months and adjust the total insured sum accordingly. When you calculate the insured amount of your home contents, make sure you are using replacement values and not market values. Remove old and discarded items that no longer need to be insured from your inventory list. Why should you pay for cover on a computer that stopped working in 2011? Similarly, the costs of some appliances and gadgets have come down in price so you really shouldn’t be paying to insure an item that was more expensive when it first hit the market than it is nowadays.
- Don’t duplicate coverage: If your short-term insurance company offers free roadside assistance, you needn’t opt for the same benefit from your medical aid provider, and if your cellphone is insured under your home contents, you shouldn’t be paying for separate cellphone cover.
- Increase your security: Your short-term insurance premium is calculated based on your risk profile. Your risk profile is based on a number of things such as where you live, the type of car you drive, and the security interventions you have in place, amongst others. You could reduce your car insurance premium if you’ve fitted your car with additional safety features such as a tracking device or an alarm, for example. You could receive a reduction on your home insurance premium if you’ve invested in new alarm system for your home or if you’ve moved to a safer neighbourhood.
- Don’t claim unnecessarily: Keep your insurance for real catastrophes which result in unexpected large losses and avoid claiming for small events that you could cover from your own pocket. When you claim for every little scratch, your insurance provider will raise your premium to reflect the higher risk you pose.
- Increase your excess: You could save some money on your insurance by increasing the excess you pay when you claim. Ideally, you want to pay the lowest excess you can in the event of a claim. However, opting for the lowest excess might make your premium too expensive for you. Best practice is to find a balance where you’re paying a reasonable premium and your excess is not too high that you won’t be able to cover that amount should you need to make a claim.
Vermaak recognises that insurance is a grudge-purchase so it is very often one of the first items to be scrapped from the monthly budget. However, he advises those who are thinking of cancelling their insurance to think wisely before they do.
“Burglaries, robberies, hi-jackings and petty theft are also on the up so insuring your valuables has become a necessity. Aside from the risk of having your car or any other possessions stolen, there is the possibility that something else could go wrong, such as a burst geyser or even a fire.
“Not many people have the cash in-hand to replace a stolen car or furniture and appliances ruined in a fire. Those who think that insurance is an unnecessary cost should consider the costs of not being insured before cancelling their short-term insurance,” concludes Vermaak.
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