Why you should review your insurance policies regularly
In most cases, a short term insurance contract automatically gets renewed annually and if you, like most people, do not thoroughly review your policy every year, you may find yourself in a position where your possessions are over- or under-insured. It is important that you are insured for the correct amount as the replacement value of some of your possessions can change year on year and this variance needs to be managed.
Your household contents need to be insured at full replacement value, i.e. what it would cost to replace that item (note that average pricing applies here) at today’s prices. Here, too, you need to review your policy carefully as you don’t necessarily need to increase your total cover. Items like electronic devices bought a few years ago would probably have decreased in value while others like furniture might have increased. The value to replace the item is the key factor to consider and not the price initially paid for the item.
You need to let your insurer know of additional items purchased or items that you may have sold or lost that no longer need cover. For some insurers, certain items need to be specified with their serial numbers, for example, mobile devices, computers and camera equipment. Valuation certificates are used to specify jewellery.
Accidental damage may not form part of your normal cover and as such, you need to make provision for it as well as reviewing the sum insured for unspecified items carried on you. Some policies do offer it, so be sure to ask your broker if your policy covers accidental damage.
Similar to contents cover, your house as a building or structure must be insured at the full value that it will cost to replace the building at the time of the claim. This replacement value is estimated based on the current building cost per square meter and should include the cost of fittings and fixtures.
Any renovations done to your home which increases its value will require the sum insured to be adjusted.
It is possible that your policy’s security requirements may have changed from one year to the next and therefore, it needs to be reviewed and checked annually against policy requirements.
If your insurer is a member of SAIA (South African Insurance Association), they are obliged to adjust car values once a year without the policy holder’s prompting. As your car is a depreciating asset, its re-sell value will decrease year on year and thus the sum insured will too. In the case of an Inception Value Policy (IVP), the sum insured will not decrease as the insured value is based on the initial purchase price and not the depreciated (current) value of the vehicle.
Remember to ensure that your insurer has the correct registration, VIN and engine numbers for your car. Policy holders are reminded to ensure that they meet the policy requirements for claims to be paid in the event of an accident or stolen vehicle. For some insurers, satellite tracking is a requirement for certain models.
It’s your responsibility
It is imperative that clients take full responsibility for understanding their insurance requirements and conditions of their policies. Contact your Garrun broker if you need any help in clarifying your policy conditions and requirements. Personal information needs to be updated when necessary as well as any change in personal circumstances such as marriage, children leaving home, etc.
Taking into account the current economy, policy holders will probably be looking for ways to cut costs without losing the benefit of comprehensive cover. Most people opt to pay a basic premium along with a standard excess. In the interest of reducing monthly expenses, you may want to consider a cheaper premium paired with a bigger excess or a higher premium with no excess, depending on your personal circumstances. Talk to your broke for advice and to discuss various options available on your individual policies.
Avoid cancelling insurance at all costs as this could potentially lead to a financial disaster far more significant than the cost of annual insurance.