During a time where the high cost of groceries, fuel, electricity, rates and taxes is leaving many South Africans cash-strapped, insurance is often one of the first items to be scrapped from the monthly budget.
However, according to Graham Craggs, spokesperson for Budget Insurance, consumers need not resort to such extreme measures. There are many ways one can actually reduce their monthly premiums.
Here are 10 ways in which to do so:
- 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. The replacement value is what it would cost you, at the time of a claim, to replace all your belongings with similar brand new ones. 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 2013? 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 car or home 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 car, home or buildings 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 measures 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 an 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. Also, claiming will affect your Cash Back Bonus if you have one.
- Increase your excess: You could save some money on your monthly insurance premium 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.
- Combine your policies: By insuring your car and home contents, or your car and buildings insurance with the same insurance provider, you’ll qualify for a discount.
- Shop around: For example, a bank will often put great pressure on a homeowner to insure through its associated insurance company, but the truth is that it does not matter which insurance company you use, as long as you insure your home. This leaves you free to shop around for the best deal.
- Review your cover on a regular basis: As your individual needs change so may your insurance needs. For instance, you may no longer need full comprehensive cover on an older or second vehicle, and may want to consider insuring it for limited cover. Budget Insurance offers Saver cover which allows customers to only select the cover that they really need as well as other option such as Third Party, Fire and Theft cover.
- Make sure you keep your details updated: Insuring your vehicle for private use if you no longer use it for business, or if your vehicle is now parked in a more secure environment overnight, like inside a locked garage, could save you money so let your insurer know. Also let your insurer know if you are working in a different location, closer to home or if you now park in the basement at work. This too could reduce your insurance premium.
Burglaries, robberies, hi-jacking’s and petty theft are all prevalent threats, so insuring your valuables is an absolute imperative. Aside from the risk of having your car or any other possessions stolen, things like a burst geyser, water leak or a fire could lead to anything from an inconvenience to financial ruin if you are not adequately insured.
“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 Craggs.