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Category:
Insurance
News /
Short Term
Insurance /
Santam
/ October 2006
Think
twice before cutting or cancelling your insurance
With interest rates having increased
by a full 1.5 percentage points in the past three months and
expected to rise further, petrol prices skyrocketing and inflation
accelerating across a wide range of products, South African
consumers are starting to feel the pinch after enjoying a long
honeymoon period of rosy economic conditions.
Families’ incomes are being squeezed
by higher bond- and car payments, and higher travel and food costs –
all essential items. As a result, many consumers are looking for
ways to cut back on other types of spending, including insurance.
Yet this is one area where it is not
wise to reduce your spending, according to Steffen Gilbert, CE of
short-term insurer Santam.
“For most people the idea of skipping
a few payments on their monthly household or car insurance premiums,
reducing the amount of coverage in the policy, or cancelling their
policies altogether can be tempting,” says Gilbert.
“They appear to be painless options
for saving a bit of money. At first they may even seem to be among
the most obvious and easiest solutions.
“However, experience has shown that
this is not the case. This is because if you do skip a payment, your
existing policy could be rendered invalid and you risk having no
coverage whatsoever and left with some very expensive bills. At the
same time, if your vehicle is damaged or your house broken into, and
you are uninsured or underinsured it will be at a time when you can
least afford it.”
He also points out that, according to
short-term insurance claims data, there has been an unfortunate
upsurge in the incidence of certain crimes like carjacking and
housebreaking in several areas of the country recently, which is
normal in deteriorating economic conditions. This is another good
reason not to lower your insurance coverage, he notes.
Gilbert advises that now is a good
time in which to reassess your insurance coverage with a critical
eye. This is particularly true for car insurance, which needs to be
re-valued downward on an annual basis to take account of
depreciation.
Policies covering house contents and
car accessories should also be updated at least once a year to make
sure they are all fully insured at replacement value.
Additionally, Gilbert says,
relatively inexpensive adjustments like adding a car alarm or extra
security to your home can have a larger impact on your premiums than
you may realize.
”Always remember to speak to your
broker if you take any protective measures in your home or with any
of your possessions outside of the home. These measures will all
help in saving you money on your premiums,” He concludes.
Author: Brigitte Taim (Lange Strategic Communications)
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