There’s no denying last year was a tough one. If, like many South Africans, you’re still feeling the bite of the credit crunch and are looking for ways to trim your monthly expenses, you’re not alone.
According to FAnews, “The fortunes of South Africa’s wealthiest individuals tumbled over the last two years, with the net worth of the country’s most wealthy individuals halving.” Because of this, “one area that has been identified as a means of reducing monthly expenses is on their insurance policies,” reports Clint Harker, Head of Insurance at Pinion Insurance Brokers (Pinion).
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It makes sense doesn’t it?
When you add up everything you pay in insurance premiums every year – think medical aid, motor insurance, household insurance, etc. – I’m sure it makes you sick to your stomach.
So this week, here are my top nine ways to cut your short-term insurance bill and save yourself a bundle of money in the process.
1. Lifestyle factors affect your premiums
Insurance is all about risk. The riskier the proposition (and the greater the chance of a claim being made), the higher your insurance premium is likely to be. Luckily for you, this also means you can usually bring down your insurance premiums by showing your insurer that you’re a relatively “safe bet”. And it’s not hard.
For example, parking your car in a locked garage (rather than in your driveway) means it’s less likely to be stolen; and your insurer should reduce your premiums accordingly. Also consider moving into a smaller property with high security and 24-hour access control. This will make a considerable difference to your cost of insurance. In fact, you could save 30% or more on household goods cover just by doing so. Even if you’re not interested in packing up and moving house, ask your insurance broker what you can do to increase your home’s level of security. Acting on that advice will put money back in your pocket.
2. Check if you qualify for savings
Remember that personal risk is also a huge factor. Insurance companies usually lump you into a group that they expect to behave in a certain way. For example, if you’re under 25, you’ll pay far higher premiums on your car insurance because of your lack of driving experience. The same is true if you have a high accident toll blemishing your track record.
But the story works the other way too. In fact, if you recently retired, you’re probably a lower-risk candidate than you were in your 40s. So phone up your broker and check if you qualify for a saving on your premium. Just one call could save around 35% per month.
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3. Carry out a regular review of your insurance policy
Replacement values change constantly so make sure you update your insurance on an annual basis. The easy (but costly) way to make sure you’re insured properly is to ask your insurance to send someone around to value your household contents and create an inventory. Or you can contact asset management specialists National Inventory Data on (051) 411-6363 or nid@nid.co.za.
But since this article’s all about saving money on your premiums, here’s a quick cheat: Instead of getting an evaluator in, go through your house room-by-room and create your own photo inventory. Record the make and model of the object and include the picture. Then send the inventory to your insurance company and adjust your premium accordingly. This way, should thugs burst into your house and steal your stuff, you have proof that you owned the item.
4. Save money through consolidation
You can often reduce comprehensive motor premiums 25% by including household goods insurance into one overall policy. The truth is, long-term policy holders often receive special rates and get better service. This relationship also gives you a good leg to stand on should you wish to negotiate a lower premium.
5. Save on monthly premiums by opting for additional excess
Opting for a voluntary excess of R1,000 in your motor insurance, for example, could save R500 in annual premiums. And when it comes to household goods insurance, a voluntary excess of R2,000 could save about R800 a year.
6. Make sure you update your insurer on any changes to your circumstances
If, for example, you’re a sales rep and you no longer use your car to drive around from client to client, you can move the car down from a high-risk to a medium-risk category. Lower-risk means lower premiums.
7. Make sure you’re not over insured for a depreciating asset
It makes sense to take out a comprehensive motor policy when a car is brand new and for the first few years after that. But later in its life, it often makes sense to change the cover to “Third Party, Fire and Theft”. After all, every year your car spends on the road reduces its value significantly.
8. Try this “no claims” bonus
Not claiming for a small financial loss could mean a long-term gain. Weigh the pros and cons of claiming carefully. If you claim for an insignificant amount – like a broken window – not only will your premiums go up, but you’re also likely to miss out on your “no claims” bonus for the year.
9. Make sure you list your items according to what they’re worth
Don’t insure your car radio – it’s just not worth it. Instead, list it as “specified” item in your policy. Typically, on a comprehensive motor policy, the maximum amount they’ll pay you out on a claim for car-sound equipment is R1,000 or 5% of the amount insured (whichever is greater). If you’ve got “super sound”, this represents a net loss – hardly music to your ears.
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