Saving on Insurance - What you need to know

January often brings with it a financial sobering known as "Janu-worry". Most consumers struggle to make ends meet due to festive overspending, back to school expenses and the long wait until payday. According to the latest Santam Insurance Barometer report released toward the end of 2023, 88% of consumers were already making adjustments to their spending as the cost of living increased.

Managing one’s finances and finding ways to cut unnecessary expenditure has therefore never been more important and quite often we forget to declutter our all-important short-term insurance contract.

Your contract with your short-term insurer is automatically renewed every year. For most people, it simply ‘ticks over’ without them going over the finer details to check that they’re neither over nor underinsured.

Thabo Twalo, Chief Underwriting Officer at Santam Broker Solutions says, ‘reviewing’ your insurance policy may even help you save some money in the long run. Below are five tips on how you can clean up your insurance policy to help you save some money in the long run.

• Adjust the amount you’re insured for: The main reason for reviewing your policy is to ensure you are insured for the right amount – this is what insurers call the ‘sum insured’ or ‘limit of indemnity’. Over the past year, you may have bought a brand-new bicycle and a few other items, all of which means you will need to adjust the contents of your home insurance cover or specify some items. Or maybe, the value of your car has depreciated, and you want to lower the premium you pay, accordingly, if your Insurer does not automatically do this for you. Check for items you’ve sold or items which are no longer in use such as old cell phones, replaced laptops or computers that could be taken off the policy. It is also helpful to weigh up the excess/ first amount payable against the value of the items insured to ensure that this is the correct amount. 

• Underinsurance: This may sound obvious to some, but, except for motor insurance (see below), the value of the goods insured should equal what it would cost to replace them today, not the original purchase price. Very often, we find that goods remain insured for their original value – for example, a leather couch bought 10 years ago would be insured for R6 000. But to replace the couch might be R20 000 today. For this reason, insurance companies usually automatically adjust your sum insured each year to keep pace with inflation. This also depends entirely on whether the original sum insured was the true replacement amount at the beginning of the policy. You should continuously review these amounts to avoid underinsurance at the time of a claim.

• The structure of your home: If you’ve enhanced the value of your home by adding solar panels, redoing your kitchen or installing a swimming pool, you need to increase the amount your house is insured for. Your house (its structure) and your belongings (the contents of your home) must be insured at their replacement value – that is, what it will cost you, at the time of a claim, to replace/rebuild the building (your home) or belongings with similar, new structures or items.

• Your car: Your car should be insured at a ‘reasonable market value’. Reasonable market value is the retail value, which is what a dealer would sell it for, considering its age, the mileage, the condition of the car and any extras. If you’re wondering what your car is worth, contact your broker or insurer directly (should you not have a broker) to work out the reasonable market value of your car.

• Save on car premiums: If your daily driving routines have significantly changed due to changed working conditions such as working from home, or changing jobs, that may result in less exposure to everyday risks. For example, the Santam SmartPark distance-based option for vehicle insurance helps to recalculate your insurance premium and adjust based on the revised number of kilometres you are likely to travel in the foreseeable future.

When doing your personal and lifestyle audits, ensure your finances are included in this process. Twalo concludes, “It is important to ensure that you update your insurer about any major life changes to potentially save on premiums and hopefully take out the worry in January. This also helps to avoid any disappointments when an incident that requires you to claim from your insurer occurs.”