Shedding the load on your insurance bill

Given interest rates, food inflation and generally tougher times ahead advice on trimming the fat abounds. Few, however, think to take a long hard look at their monthly insurance bills.

Gari Dombo, Managing Director of Alexander Forbes Insurance, suggests that, “Cutting fixed monthly costs like insurance can amount to considerable savings over time.”

An effective way of reducing your monthly insurance bill is to self-insure. Self insurance involves deciding what insurance you could do without – and coverby yourself in the event of loss occurring.This is, in fact, the basic concept of risk management – taking on some of the risk yourself to reduce monthly premiums.

Ultimately, the trick to cheaper insurance bills is to build up a kitty to manage areas of self insurance. This ensures you are covered if something does go wrong. If you don’t have this kitty you will not be covered in which case you need to make sure that the things you have chosen not to cover are not essential to your survival.

For example, “Things like cell phones, rings and watches, along with most of the stuff you use on a daily basis, are all replaceable at not so crippling costs”, says Dombo.

Rates on All Risk policies are high because you are covering valuables that you use outside of the home. AllRisk policies alsocover youanywhere in the world. Yet how often are you actually overseas?

Instead, Dombo advises that, “You may consider giving up your All Risk policy, provided that you are able to self-insure the smaller day to day items that you may loose. Or, you may even decide that you do not need to insure them at all. In the event you were to travel abroad you could always take up temporary travel insurance.”

Also, if you improve your risk, that is, make yourself less likely to suffer loss your premium is also likely to come down.

For example, says Dombo, “If you put in an alarm system and electric fences your monthly premium should decrease.”

Or, perhaps, if you moved to a high security complex you could exclude theft cover.

Alternately, if your car is parked on the street or in your garden, building a lock up garage could reduce your monthly car premiums substantially.

Furthermore, adds Dombo, “Changing your vehicle insurance to a named driver scheme may also reduce car premiums.”

For example, if you live alone or there are just two of you in your household, nominating you and your partner as the only people who drive your car should reduce your premium. If you have older children who regularly use your car, however, this would probably not be an advisable option.

Alternately, you could reduce your vehicle premium to just third party, fire and theft; or just third party - instead of comprehensive cover.

Dombo cautions that, “This strategy does, however, once again involve an element of self insurance. Policy holders need to be sure that they can cover themselves for the loss of uninsured property or occurrences - highlighting the advisability of building up a sufficiently large kitty to deal with any elements of self insurance if you are to follow this route.”

Finally, if a client pays their premiums annually they will incur a substantial discount. Similarly a saving can be achieved by consolidating all your portfolios and paying by one debit order.

Having five insurers for five classes of insurance is expensive. Instead, concludes Dombo, “Different classes of insurance tend to subsidise one another. Having all your insurances with one insurer will also reduce your overall premium cost.”