The year has begun on a sore note for consumers; with two consecutive fuel price hikes so far, and another expected in March. The tax budget speech on Wednesday could also spell trouble for the pockets of South Africans. Consumers are no doubt feeling the pinch and, as any prudent person would, are looking for ways to save.
“Trends in the market have shown that, when times are tough, people start by cancelling their life insurance followed by short-term insurance. This is because insurance is a grudge purchase on a month-to-month contract, and cancellation is as simple as a phone call or email,” says Lizette Erasmus, an Insurance Expert at IntegriSure
“But short-term insurance,” says Erasmus, “is the last thing you should cancel. We’ve had a few occasions where previous clients would call us in a panic because, as Murphy’s Law would have it, shortly after cancelling their insurance, disaster hit. At this stage, in the case of motor incidents, you may not only be liable for the damages to your own car but also for the third party involved.”
Erasmus explains that there are several ways consumers can save money on their insurance. “By putting in place measures to reduce their risk profile, such as putting in a tracking device, being vigilant on the road so as to reduce the possibility of road incidents, and regularly maintaining your vehicle or house with the necessary security precautions, you increase your chances of paying a lower premium.”
Instead of cancelling insurance when times are tough, Erasmus recommends that consumers call their insurance provider to discuss options. “It is better to remain with third-party insurance than no insurance at all. Third-party insurance helps pay for the damage you cause to another person’s property or vehicle in an incident or accident.”
At times, you may also be able to renegotiate your excess and premium figures with your insurance provider.
“By increasing the excess you pay at claim stage, you can pay a lower premium. It is also important to note that the extent to which you mitigate the risks in your life can give you an edge when renegotiating your premiums. The better you mitigate risks, the lower your risk profile, and this counts in your favour at the point of negotiating,” Erasmus advises.
“Before you make that important call to your insurance provider, asses what insurance cover you don’t need anymore. And, if you want to renegotiate because times are tough, play open cards with your insurance provider to ensure that you still have basic cover in place or at least third-party cover.”
Erasmus warns consumers against underinsurance in their quest to save money. “While it is important to find ways to save on premiums, make sure you are still adequately insured at current replacement value. Replacement value refers to the amount needed to replace an asset at the present time, according to its current worth. Ensuring that you are insured for current replacement values on your insured possessions means that you will not have to pay-in the shortfall to replace lost possessions at claims stage. It is advisable to update these values twice a year due to fluctuating markets,” she concludes.