Ensuring your insurance doesn’t give you sleepless nights
Insurance should give you peace of mind that you’re covered if the worst happens, but it can also cause nagging doubts that you may be underinsured or paying too much.
So how do you navigate the numerous options when it comes to protecting your home, belongings, health and even income?
By applying some basic principles you can ensure that you’ve chosen the right insurance cover for your circumstances.
The first thing to consider is the extent of your risk, as this significantly influences your monthly premiums. Insurers consider different risk factors depending on the kind of cover being offered.
For example when quoting on cover for residential property – your house, not the contents – an insurer might consider the following:
- The year it was constructed;
- The type of construction. Is it brick or wood? Does it have a thatched or tiled roof?
- The size of the property;
- Whether any upgrades or extensions have been done;
- If any protective equipment such as fire-extinguishing systems are installed;
- Where it is situated. Is there a possibility of fires or floods or is it in a high-crime area?
If you have a bond, your bank will insist that your house is insured. Often banks will offer their own insurance products as part of the bond agreement, but you do have the right to look into other options.
Also remember that the bank is only looking to insure its liability - the money it has lent you to buy the property. If you have also invested your own money in the property or have enhanced or extended it, you may be under-insured.
Car insurers apply a similar set of criteria when calculating premiums. These include:
- The vehicle model;
- Year of manufacture;
- Your gender – women tend to be more careful drivers than men;
- Your age – younger drivers attract higher premiums as they tend to have more accidents;
- The radius of operation – are you using the car for short shopping trips or driving long distances;
- Your claims history;
- Security – is the vehicle fitted with a good alarm/ immobiliser? Is it kept in a locked garage or parked on the street?
One way of reducing your premiums is to set aside some money for supplementing your insurance in case of minor losses or damage. If you’re only claiming a small