Every year, we resolve to ‘do better’, change things up and be the best versions of ourselves. It’s easy to overlook one’s finances, but money should be a pivotal part of this process. Managing one’s finances and finding ways to cut unnecessary expenditure has never been more important and quite often we forget to declutter that all-important insurance contract.
Your contract with your short-term insurer is automatically renewed. For most consumers, it simply ‘ticks over’ without the policyholder going over the finer details to check that they’re neither over nor underinsured. This is all well and good, until the unforeseen happens.
Santam says that ’reviewing’ your insurance policy may even help you save some money in the long run. Marius Steyn, Personal Lines Underwriting Manager at Santam, gives the below five tips on how you can clean up your insurance policy to help you save some money in the long run.
1. Adjust the amount you’re insured for: The main reason for reviewing your policy is to ensure you are insured for the right amount – this is what insurers call the ‘sum insured’ or ‘limit of indemnity’. Over the course of the past year, you may have bought a brand-new bicycle and a couple of other items, all of which mean you will need to adjust the contents of your home insurance cover. Or maybe, the value of your car has depreciated, and you want to lower the premium you pay, accordingly. Therefore, by ensuring for the correct amount which may result in a slight premium increase, you save money in the event of a claim due to the fact that under insurance, as addressed below, would not be applicable to the loss or damage.
2. Underinsurance: This may sound obvious, but, except for motor insurance (see below), the value of the goods insured should equal what it would cost to replace them today, not the original purchase price. Very often, we find that goods remain insured for their original value – for example, a leather couch bought 10 years ago would be insured for R6 000. But to replace the couch might be R20 000 today. For this reason, insurance companies usually automatically adjust your sum insured each year so that the covered amount keeps pace with inflation, and this should be made clear in your policy document, but the adjustment done by the insurer may not be sufficient and you may have to increase it further.
3. The structure of your home: If you’ve renovated your home and therefore enhanced the value of your home by as an example, redoing your kitchen, bathroom or installing a swimming pool, you need to increase the amount your house is insured for. Your house (its structure) and your belongings (the contents of your home) must be insured at their replacement value – that is, what it will cost you, at the time of a claim, to replace/rebuild the building (your home) or belongings with similar, new structures or items.
4. Your car: Your car should be insured at a ‘reasonable market value’. Reasonable market value is the retail value, which is what a dealer would sell it for, considering its age, the mileage, the condition of the car and any extras. If you’re wondering what your car is worth, contact your broker or insurer directly (should you not have a broker) to work out the reasonable market value of your car.
5. Save on car premium: As a result of the COVID-19 pandemic, the daily driving routines of consumers have changed significantly. As a result, there are fewer vehicles on the roads, with less exposure to everyday risks. In response to these changing circumstances and the evolving needs of clients, Santam offers the SmartPark distance-based vehicle insurance benefit – where clients’ insurance premium will be recalculated and discounted based on the revised number of kilometres they are likely to travel in the foreseeable future – all without having to restructure their policy or compromising their cover. It’s simple: If you are driving less than 15000km a year, you could save up to 20% on your insurance premium.
Steyn concludes, “It is important to ensure that you update your insurer about any major changes for many reasons to avoid any disappointments when an incident that requires you to claim from your insurer occurs. Help us help you by ensuring that you are adequately insured for your household contents and vehicle.”