Friday, March 7, 2014

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

Martin Janse van Rensburg from Budget Insurance says that consumers could even enjoy reductions on their premiums by making some changes.

“Short-term insurance customers are increasingly seeing the benefits of purchasing insurance policies that combine household and motor insurance. In addition to the advantage of less administration, customers are seeing the financial benefits too, as insurers offer discounts for combined portfolios.

“From the insurer’s point of view, combined policies work like any other product where ‘buying in bulk’ offers a financial benefit. The administration costs are lower when a single, combined policy is written, and the cost savings can therefore be passed on to the customer. All in all, combining your household contents and vehicle insurance makes good financial sense,” says Janse van Rensburg.

Customers taking advantage of a combined policy are also seeing twice the value-adds. They have access to assistance programmes that come with motor insurance, such as Roadside, Medical and Home Assist, plus they have access to the extensions that come with household cover such as the replacement of locks and keys if they are lost or damaged; veterinary expenses if your pet is injured in a road accident and free access to emergency services like plumbers, electricians, glaziers and locksmiths.

“It all comes down to ensuring that you have a holistic insurance product that suits your lifestyle, your pocket and your personal requirements,” says Janse van Rensburg.

Other ways consumers can shave some rands off their insurance premiums include:

Insure your vehicle for the correct value:Drivers of older vehicles must ensure that they are not over-insuring their cars. While Budget 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 a 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.


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