By Karen Rimmer
While it is always a good idea to review your household budget and look for ways to save, especially in today’s tough economic climate, don’t fall into the trap of cutting corners on your insurance policies.
There are a number of ways to cut your insurance costs and save a little extra month to month, but you need to be wise about how you tackle this. For example, reviewing the specified items listed in the all risk section of your home contents policy and removing pieces that are no longer relevant is a great start.
However, you should always consider what is essential, what you could possibly do without, and be careful not to cut too much. You do not want to find yourself in an under-insured position down the line.
It might be possible to find a cheaper policy for your house or car, but in many cases, you’ll discover that the cover is more limited than you’d like and that the terms and conditions put you at a disadvantage in the event of a claim.
To ensure you aren’t cutting yourself short, the three essentials of short-term insurance should always be observed:
Home insurance:
For most people, your home is the most valuable asset you’ll ever own, and a catastrophic event such as a fire could ruin you financially if you are not adequately insured.
This is definitely not an area for short cuts, and it’s important to ensure you are adequately insured with a well-established reputable insurer.
When it comes to insuring your property, make sure that you are covered at the current building costs per square metre and make provision for any outside extras such as your paving, swimming pool, tennis court or fencing etc.
Insurance for household contents:
Many people overlook the fact that your household contents need to be insured for their current replacement value – and not for the amount they cost you when you bought them.
It is important to revise your sum insured on an annual basis to keep up with inflation and increasing costs.
Car insurance:
The last absolute must-have when it comes to short-term insurance is adequate car insurance. Your policy should provide cover in the event that you were negligent and caused the accident, as the other party would be able to hold you liable for any damages to their vehicle, as well as medical costs.
This can easily cause financial ruin if you are not adequately insured and given the high accident statistics in South Africa, it is simply not a risk anyone can afford to take.
Rimmer shares her best tips on how to ensure your cover is adequate:
- When taking out an insurance policy, make sure that you declare all your previous claims/losses so that you cannot be found to have withheld relevant information from your insurer, which may invalidate future claims.
- If you are under debt review, you need to inform your broker/insurer.
- If you have a criminal record this also needs to be disclosed.
- Make sure you give the correct details regarding security measures in place on your property or in your vehicle. For example, whether you have an alarm system linked to a security company at home, or a tracking device/immobiliser in your car. It is also important to ensure that these security measures are always applied and maintained.
The best way to see if there are any insurance costs you could be saving on – without risking any future benefits should you ever need to claim – is to discuss your needs and circumstances with an experienced insurance adviser.
Karen Rimmer, Head: Distribution of PSG Insure
IOL Business