Ensuring your insurance doesn’t give you sleepless nights

Insurance should give you peace of mind that you’re covered if the worst happens, but it can also cause nagging doubts that you may be underinsured or paying too much.

So how do you navigate the numerous options when it comes to protecting your home, belongings, health and even income?

Direct Axis’ head of marketing, Gavin Moir, says that by applying some basic principles you can ensure that you’ve got the right cover for your circumstances.

The first thing to consider is the extent of your risk, as this significantly influences your monthly premiums. Insurers consider different risk factors depending on the kind of cover being offered.

For example when quoting on cover for residential property – your house, not the contents – an insurer might consider the following:

• The year it was constructed;
• The type of construction. Is it brick or wood? Does it have a thatched or tiled roof?
• The size of the property;
• Whether any upgrades or extensions have been done;
• If any protective equipment such as fire-extinguishing systems are installed;
• Where it is situated. Is there a possibility of fires or floods or is it in a high-crime area?

If you have a bond, your bank will insist that your house is insured. Often banks will offer their own insurance products as part of the bond agreement, but you do have the right to look into other options.

Also remember that the bank is only looking to insure its liability – the money it has lent you to buy the property. If you have also invested your own money in the property or have enhanced or extended it, you may be under-insured.

Car insurers apply a similar set of criteria when calculating premiums. These include:

• The vehicle model;
• Year of manufacture;
• Your gender – women tend to be more careful drivers than men;
• Your age – younger drivers attract higher premiums as they tend to have more accidents;
• The radius of operation – are you using the car for short shopping trips or driving long distances;
• Your claims history;
• Security – is the vehicle fitted with a good alarm/ immobiliser? Is it kept in a locked garage or parked on the street?

One way of reducing your premiums is to set aside some money for supplementing your insurance in case of minor losses or damage. If you’re only claiming a small amount for a bumper bashing, it may be better to pay yourself and not make a claim. This will help keep your premiums in check.

Emergency savings can also be used to pay top up insurance claims. If the insurer is only liable for a certain amount, or you are required to pay an excess, there may be a shortfall.

Another savings tip is to make sure you don’t have duplicate cover. This happens when you have two insurance policies which cover the same risk, meaning you’re effectively paying twice. It happens more often you’d think. People can forget to cancel policies, sign up for financial products without realising these include an insurance component or an employer may start providing medical cover when you have an existing individual medical aid.

Having all your policies with one broker or insurer who covers your home, car and health care can be more cost effective and also means they have a bird’s-eye view of all your requirements, which should eliminate any duplication.

Finally choosing an insurance provider can have serious implications for your financial well-being. As with all such decisions it will require research, planning and legwork. Compare different companies and what they offer and assess which cover will work best for your circumstances and budget. Nowadays you can do much of this research and even get quotes online, so it’s relatively easy to compare offers and pricing before you decide on an insurer.

For more information about how to save money on insurance and other personal finance tips visit https://www.directaxis.co.za/topics-tips-tools/how-to-save-money-on-insurance