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Five ways to ensure you are adequately insured at the right price

29 July 2021 Santam

After over a year of lockdowns, many South Africans have vastly changed circumstances. Managing one’s finances and finding ways to cut unnecessary expenditure has never been more important. As National Savings month draws to a close, South Africa’s leading short-term insurer Santam shares tips on how decluttering your insurance can help you ensure you are adequately insured at the right price.

Contracts with short-term insurers tend to be automatically renewed, which means cover may be outdated and inadequate. It’s vital to do annual check-ins to go over the finer details and ensure a policy is up to date. An annual insurance ‘spring clean’ is highly under-rated and should be part of getting a financial house in order. Plus, it might save money in the long run.

Marius Neethling, Personal Lines Underwriting Manager at Santam, gives five tips on how you can clean up your insurance policy.

1. Adjust the amount you’re insured for: The main reason for reviewing your policy is to make sure that you are insured for the right amount – this is what insurers call the ‘sum insured’ or ‘limit of indemnity’. Over the course of the past year, you may have bought a brand-new bicycle and a couple of other items, all of which mean you will need to adjust the contents of your home insurance cover. Or maybe, the value of your car has depreciated, and you want to lower the premium you pay, accordingly.

2. Underinsurance: This may sound obvious, but, except for motor insurance (see below), the value of the goods insured should equal what it would cost to replace them today, not the original purchase price. Very often, we find that goods remain insured for their original value – for example, a leather couch bought 10 years ago would be insured for R6 000. But to replace the couch might be R20 000 today. For this reason, insurance companies usually automatically adjust your sum insured each year so that the covered amount keeps pace with inflation, and this should be made clear in your policy document.

3. The structure of your home: If you’ve enhanced the value of your home by replacing your roof, redoing your kitchen or installing a swimming pool, you need to increase the amount your house is insured for. Your house (its structure) and your belongings (the contents of your home) must be insured at their replacement value – that is, what it will cost you, at the time of a claim, to replace/rebuild the building (your home) or belongings with similar, new structures or items.

4. Your car: Your car should be insured at a ‘reasonable market value’. Reasonable market value is the retail value, which is what a dealer would sell it for, considering its age, the mileage, the condition of the car and any extras. If you’re wondering what your car is worth, contact your broker or insurer directly (should you not have a broker) to work out the reasonable market value of your car. You can use Santam’s car calculator to do so.

5. Save on car premium: As a result of the COVID-19 pandemic, the daily driving routines of consumers have changed significantly. As a result, there are fewer vehicles on the roads, with less exposure to everyday risks. In response to these changing circumstances and the evolving needs of clients, Santam offers the SmartPark distance-based vehicle insurance benefit - where clients’ insurance premium will be recalculated and discounted based on the revised number of kilometres they are likely to travel in the foreseeable future – all without having to restructure their policy or compromising their cover. It’s simple: If you are driving less than 15000km a year, you could save up to 20% on your insurance premium.

Neethling concludes, “It is important to ensure that you update your insurer about any major changes to avoid any disappointment when an incident that requires you to claim occurs. Help us help you by ensuring that you are adequately insured for your household contents, building and vehicle.”

Quick Polls

QUESTION

Healthcare brokers have long complained about inflation-plus medical scheme contribution increases; but pandemic may have changed things. What will pandemic-induced changes in hospital utilisation do to medical scheme contribution increase patterns?

ANSWER

Below inflation increase for 2022, then back to inflation-plus
Long-term trend of below inflation increases
Inflation-linked hikes for 2022, then back to inflation-plus
This is a 2-year hiccup, inflation-plus increase trend remains in place
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