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The moving ins - and outs

19 March 2021 Santam

WHAT YOU NEED TO TELL YOUR CLIENTS WHEN CONSIDERING INSURANCE FOR CO-HABITING

The economic downturn over the past year, coupled with the need to reduce expenses, has seen a rise in vacant properties across South Africa and an increase in clients co-habiting. Taking the decision to move in with a housemate or your partner is a big step. It’s wise for your advise your clients to consider the emotional, financial and insurance implications and have critical conversations upfront.

Marius Steyn, Personal Lines Underwriting Manager at Santam, and Marius Neethling, Manager Personal Lines Underwriting (Systems and Administration) at Santam, caution that there are a few considerations you need to communicate to your clients when merging households. “In the scenario where your client moves in with their partner, an insurer usually considers them the equivalent of a common-law husband and wife, depending on the seriousness of their relationship. That means they can take out a policy together. If they are moving in with a housemate, both parties will need their own separate insurance policies. In this case, they will have to insure their own belongings and communal living underwriting rules will apply. In both cases there are lots of logistics to tick off – like making sure the household contents are covered.”

Here, Steyn and Neethling chat through the checklist that you can run through with your clients you to help them make the most informed insurance decisions and protect themselves when co-habiting:

Make sure that you have checked that they have adequately covered the combined contents of their home:
Moving in together often results in a staggering amount of ‘stuff.’ Which means your client and their partner or housemate will probably need to update the household contents insured amount. If your relationship is seen as serious (insurers look for things like how long they’ve been together, if they’ve co-purchased furniture, etc.), then an insurer will treat them the same as they would a married couple. This means you can advise your client to take out a policy between themselves with one person being the main policyholder and the other, the additional insured.

However, please share the following important considerations with your clients:
• Remember, the main policyholder will be paid out in the event of a claim. It’ll then be up to your client to pay the additional insured party. Insurers don’t get involved in these politics and are in no way responsible if the policyholder does not pay his/her partner or housemate. So, trust is important.
• If both clients have separate household contents policies with different insurers and are wondering which insurer to go with, advise them not to just pick the lowest premium price: instead encourage them to consider the benefits and excesses – what they pay and what they receive in return.
• Get their household contents evaluated (or do they can do this themselves, using an online calculator) so they are certain that they are adequately covered for the replacement value of all their combined items.
• When your household contents are on the move between properties your client should notify their insurer of the new address prior to the day they move.
• It’s in your clients interest to tell you about all the security features at their new home. Generally there will be specific security requirements in order to qualify for burglary and theft cover.

If you need to know if your client happen to have a fight and temporarily moves out…
It’s not commonly known, but, if your client happens to argue and temporarily moves out and takes some of their household contents with them, these items will still be covered in their temporary abode, provided that this is a private building – not a tent or caravan, for example. This only applies to a temporary situation though – if it’s a permanent split, then they’ll need their own new policy.

Vehicle insurance is also important:
Remember to add your partner as a regular driver on your policy if he or she uses your vehicle more frequently than you do.

If it really doesn’t work out:
If, sadly, the relationship comes to an end, then you should advise your client to get his/her own policy as soon as possible, especially if they have one policy between them, but your client is not the main policyholder. Remember, if they are the additional insured, it’s up to the policyholder to pay them in the event of a claim, which could get difficult if they are not together anymore.

Quick Polls

QUESTION

Financial behaviour experts suggest that today’s risk modelling methodologies ignore your client’s emotional ability / behavioural capacity. What are your thoughts on spicing up risk profiling tools to make allowance for your client’s financial behaviours

ANSWER

[a] Bring it on; my client’s make too many irrational financial decisions
[b] Existing risk profiling tools are adequate
[c] Risk profiling tools should be based on the model / rational client
[d] The perfect risk profiling tool is science fiction
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