Four reasons you should update your insurance now

There are several good reasons why you should update your insurance at the beginning of each year.

While insurance lets you rest assured that you will be able to replace property lost to theft or adverse weather, you must also ensure that you will have enough cover to do so.

Insurance policies are not static agreements concluded once-off. Short-term insurance products are designed to evolve along with you and your family as your life and needs change. This could also be one new year’s resolution you can actually stick to.

“Part of developing good ‘financial hygiene’ involves making a habit from reviewing your insurance needs at the onset of each year. Think of it as your own ‘annual audit’, a way of making sure that you are never underinsured, and that you are ready to make an informed decision when your policy’s annual renewal date comes up,” says Karen Rimmer, head of distribution at PSG Insure.

Conducting a yearly review of your insurance needs will ensure that your personal risk mitigation strategy is intact and that the claims process runs smoothly and without complications should the unforeseen happen.

Rimmer says you should consider updating any information about the value of your property, consider if anything has changed regarding your insured vehicles, update your list of valuables, and consider a value-add product for your existing policies.

ALSO READ: Power surges and insurance: How to deal with the other load shedding monsters

Updating the value of your property

“Most people only think of updating their home insurance policy when they change address, but there are several reasons why your cover may need to be reviewed. Best practice is to consider how any renovations you made within the past year may affect the value of your property,” explains Rimmer.

Renovations, such as installing a pool or remodelling a kitchen are the kind of alterations that prompt most people to update their insurance policy, but an alteration as subtle as changing wooden window frames to aluminium or upgrading the light fittings in the house can make a significant difference to the value of the property.

“By definition, those alterations will also increase the replacement value of the house. If your policy is out of date and does not reflect the current value of your home, it becomes an issue if something such as a fire or natural disaster causes loss or damage. Then you run the risk that your insurance pay-out will not cover the full cost of rehabilitation or a complete rebuild.” 

ALSO READ: Ensure your car insurance claims are paid with these tips

Did anything change regarding your insured vehicles?

Rimmer says it is common for insurance clients to forget to update their details pertaining to an insured vehicle every year. For example, if a dependent child starts using the car to travel to university every day at the start of the new year, it will have a bearing on the terms of the policy.

Also, if you start using a car previously used for personal transport for commercial reasons, it will affect the way the policy is structured and what it covers.

In addition, just as in the case of a property, Rimmer suggests that any alterations or upgrades on a car must be included as part of the insurance cover, to ensure that in the unfortunate event of an accident or complete write-off, the car’s replacement value is accurately recorded in the policy.

ALSO READ: Leave the budget in 2022 and kickstart 2023 with a spending plan

Update your list of valuables

It is also useful to check your valuable items, such as expensive jewellery and watches, designer handbags, electronic equipment, sports gear or cameras every year. Any big-ticket items like these bought in the previous year, must be added to your all-risk cover under your insurance policy.

“Valuable inherited items must also be added to your home contents policy, as well as any family heirlooms such as art or antiques. Although the sentimental value of these kinds of items cannot be replaced in the case of theft or damage, being reimbursed for their financial value may contribute to alleviating the feeling of loss.”

ALSO READ: Financial lessons from the pandemic years you can use in 2023

Consider a value-add product for your existing policies

Rimmer says after any adjustments to an insurance policy, it remains useful to consider whether an existing policy requires an “add-on” clause, such as the cost of a hired vehicle should your insured vehicle need to go for repairs.

“These kinds of value-added insurance products are often referred to as ‘top-ups’ and serve to fill any existing gaps that a policy may not conventionally include, providing an added level of peace of mind to the risk management process.”

Updating an insurance policy is not a lengthy or laborious process and your insurance adviser is there to guide you along the way.

“As we move steadily into the new year, now is the ideal time to dedicate an hour to reviewing your insurance needs and ensuring that everything you have in place caters to your immediate and future needs,” Rimmer says.