It’s a good idea to make time in your diary for a review of your short-term insurance policies – those on your possessions, such as your property, home contents, car and valuables. It will probably save you money and, importantly, will ensure that you are fully protected.
Short-term insurance actuary John Wessels says that, instead of viewing short-term insurance as a vital financial planning tool to be reviewed annually and updated when circumstances change, most consumers consider it a grudge purchase and only look at their policy documents when they need to claim.
Wessels says that, over time, not only do your possessions change, but your risk profile may change, possibly to your advantage. He says the latter is especially true for younger drivers who have increased their driving experience and are claim-free.
He says that, in doing your annual review, you need to make sure you are neither over-insured nor under-insured.
“If your home and its contents are not insured for today’s replacement value, you will only receive a percentage of your claim should there be a loss, even if it is just a partial loss. My advice is to insure your home for what it would cost to rebuild it entirely and to complete your insurer’s inventory form to ensure that your household contents are accurately valued,” Wessels says.
On the other hand, if your possessions are insured for more than they are worth, you will pay a higher premium than necessary, he says, adding that in the case of jewellery and other valuable items, such as laptops, you are likely to be asked for proof of the value of the item when you claim.
Shop around
Unlike long-term insurance, which is the insurance of people (life and disability cover) and which gets more expensive as you get older, it’s worthwhile to occasionally shop around for short-term insurance, the insurance of things. You are not likely to get cheaper life or disability cover than what you are currently paying, but, because of the competitive nature of the short-term industry, you may well find cheaper short-term cover. However, you need to compare apples with apples when comparing quotes, allowing for differences in excesses (the amount that you pay from your pocket), cover limits, and terms and conditions.
“Just make sure you are honest about your claims history when shopping around,” Wessels cautions.
Ways to save
Wessels and Siyakha Masiye, spokesperson at insurance company Miway, offer the following tips to save on premiums without compromising on your protection.
• Consider higher excesses. “Opting for a higher excess can be a great way to lower your premiums, but it’s a trade-off,” Masiye says. “It means paying less every month, but if you need to claim, your upfront costs will be higher. This is a good option for low-risk drivers who don’t claim often.”
• Upgrade your security. Masiye says that one of the most effective ways to negotiate a better premium is to demonstrate that you have taken proactive steps to protect your assets. “Simple actions like installing an advanced security system in your home or vehicle can significantly lower your premium,” says Masiye. “Regular maintenance checks, fire prevention systems, and even parking your car in a secure location can also result in cost savings.”
• Cancel unnecessary add-ons. “Knowing exactly what you need cover for will help you avoid overpaying for unnecessary add-ons,” Masiye says. An example, says Wessels, is the provision of car hire when your car is in for repairs. “Ask yourself whether you really need it,” he suggests. “Perhaps your family has more than one car and you could get by for a couple of weeks with only one car. Or maybe you could use a ride-hailing service for a while?”
• Bundle your policies. Bundling your short-term policies with the same provider not only simplifies your coverage but also gives you greater negotiating power,” explains Masiye. “For example, combining car and building insurance can lead to substantially lower premiums on both your car and building policies. Additionally, many insurers offer loyalty rewards or lower rates for clients with no claims history.”
