Topics, Tips & Tools / Personal Finance

How to Save Money on Insurance

12 March 2015
If you work hard towards financial stability, especially to be able to provide for yourself and your family, then insuring your assets affords you a certain degree of wellbeing. However, when you begin considering protecting your belongings, health and income with insurance - it can be a little tricky to navigate all of the options. 
For more information on saving money on insuring the necessities and securing your peace of mind, read on. 
Have the Option of Supplementing 
Consider setting aside savings specifically for supplementing your insurance needs in terms of losses or damage. This is a risk-management method, where your own dedicated savings allows you a cheaper insurance alternative when considering a claim. This money can be used when your insurance provider is only liable due to your benefits, to pay for a specific amount; or when the cost of the damage or loss is a small amount - enabling you to pay it without having to claim and incur long-term premiums. Having savings in place that’s specifically for this type of expense, can also help you stay out of debt for emergencies. 
Consider Your Risk Rate
Risk rates play a significant role when calculating the consumer’s monthly premium. The greater the risk rate, the higher the monthly premium will be. Similarly, the lower the risk rate, the less the monthly premium. Depending on the type of insurance you’re paying for, different factors are considered when calculating your risk rate. For example: 
Homeowner policies and commercial property coverage: 
  • Year constructed
  • Type of construction
  • Size of property
  • Updates on the building
  • If protective equipment is installed
  • Area (If there is a possibility of flooding, fires or it is situated in a crime area)  
Car insurance:
  • Vehicle model
  • Year of manufacturing
  • Gender
  • Age
  • Radius of operation
  • Claims history   
You can lower your loss history by using your self-insurance savings for small losses - instead of adding to your loss history and increasing your risk rate (and by extension your premiums). Also, bear in mind that there are other factors that can affect this risk rate, for example your credit bureau score. 
Duplicate Cover
Often people end up with duplicate cover, which can in some cases mean paying more than you necessarily need to on a monthly basis for a decent level of cover. It might seem obvious, but having all your policies with one insurance company (for example, covering your home, car and health care) can be more cost effective and you can deal with one source who has a birds-eye view of your requirements. This makes it easier to avoid duplication.  
One of the causes of duplicate cover may occur when your employer begins covering your health cost when you also had individual medical aid. If you have more than one insurance plan for a certain area in your life, whether it is for your home, belongings, health care or car, and would like to save money, cutting out any duplication might help.  
Choosing an insurance company is a serious choice, and with any such decision, research, planning and legwork is required. You’ll need to look at, and compare different insurance company offers so that you can find which cover works best for your requirements and your budget. Online quoting has made this process much easier, so take advantage and contact as many providers as possible before settling on a policy. 
For more information on money-saving tips, read our article on “How to Save Money on Medical Costs”.