MONEY CLINIC | What should I pay attention to when reviewing my insurance policies?

It is important to ensure that you inform your insurer of any major changes for many reasons to avoid disappointment when an incident occurs which requires you to claim from your insurer.

Every year we resolve to do better, to change things and to be the best versions of ourselves. It’s easy to overlook your finances, but money should be an essential part of this process.

Managing finances and finding ways to cut unnecessary expenses has never been more important, and so often we forget to declutter that all-important insurance deal.

Marius Steyn, Head of Personal Insurance Underwriting at santamlists some tips on how you can clean up your insurance policy to help save you money in the long run.

1. Adjust the amount you are insured for

The main reason to review your policy is to make sure you are insured for the correct amount – this is what insurers call the ‘sum insured’ or ‘limit of indemnity’. In the past year, you may have purchased a brand new bicycle and a few other items, which means you will need to adjust the contents of your home insurance coverage. Or maybe the value of your car has depreciated and you want to reduce the premium you pay as a result.

Therefore, by ensuring the correct amount, which may result in a slight increase in premium, you save money in the event of a claim, as insurances, as shown below, would not apply to the loss. or damage.

2. Underinsurance

It may seem obvious, but with the exception of car insurance, the value of insured property should be equal to what it would cost to replace it today, not the original purchase price. We often find that goods remain insured for their original value – for example a leather sofa bought 10 years ago would be insured for R6,000. But replacing the sofa could cost R20,000 today.

For this reason, insurance companies usually automatically adjust your sum insured each year so that the amount covered keeps pace with inflation. This should be clearly stated in your policy document, but the adjustment made by the insurer may not be sufficient and you may need to increase it further.

3. The structure of your house

If you have renovated your house and therefore increased the value of your house by, for example, redoing your kitchen, your bathroom or installing a swimming pool, you have to increase the amount of insurance on your home. Your house (its structure) and your belongings (the contents of your dwelling) must be insured at their new value – that is to say, what it will cost you, at the time of a claim, to replace/ rebuild the building (your accommodation) or property with similar and new structures or objects.

4. Your car

Your car must be insured for “reasonable market value”. Reasonable market value is the retail value, which is the price a dealer would sell it for, considering its age, mileage, condition of the car, and any extras. If you’re wondering what your car is worth, contact your broker or insurer directly (if you don’t have a broker) to determine the reasonable market value of your car.

Questions may be edited for brevity and clarity.

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