While national savings month is always a good time to review your household budget and look for ways to save, don’t fall into the trap of cutting corners on your insurance policies, warns Riana Wiese, an insurance adviser at PSG Insure. “There might be ways to cut your insurance costs and save a little extra month to month, but it can be catastrophic for your finances if you need to claim and find yourself underinsured,” said Wiese. “You may be able to find a cheaper policy for your house or car, but in most cases you’ll discover that the cover is limited and that the terms and conditions put you at a disadvantage in the event of a claim,” said Wiese.
3 essentials of short-term insurance First and foremost is home insurance. For most people, your home is your most valuable asset, 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 shortcuts, and it’s important to ensure you are adequately insured with a well-established, reputable insurer,” said Wiese. When it comes to insuring your property, make sure that you are covered at the current building costs per square meter and make provision for any outside extras such as your paving, swimming pool, tennis court, fencing etc. Next up is your 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,” said Wiese. It is important to revise your sum insured on an annual basis to keep up with inflation and increasing costs. 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,” said Wiese.
Best tips 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.
- When it comes to disability cover and life insurance, it is paramount that you provide accurate, truthful information related to your health and do not withhold anything that may be relevant as this could leave you or your dependents without an income when it is most needed – even if you’ve been paying your monthly premiums for years.