Santam offers Budget 2018 ‘belt-tightening’ tips for South Africans

In response to the 2018 Budget Speech, Santam, South Africa’s largest general insurer, has urged households to brace for another year of ‘belt tightening’ and consolidation of expenses.

Andrew Coutts, Santam Head of Intermediated Distribution, said in view of the tough economic times, South Africans, households and businesses, should when compiling their budgets take into account immediate needs and potential threats to one’s assets, safety and security.

“The 2018 Budget confirms that consumers are facing tougher economic times than ever, compelling households and businesses to implement expense consolidation measures according to their unique set of circumstances and financial priorities,” said Coutts.

“While managing tougher monthly expenses, it’s important to distinguish between different kinds of expenses, finding ways to get the most out of items that are considered recurring expenses,” he added.

While insurance is a monthly recurring expense, it is a critical area for affecting significant household savings. According to Coutts, high-value assets such vehicles and homes should remain high priority items in a budget, including insuring them.

“It is important to remember that when things go wrong, if insurance is not in place, it can be financially devastating on individuals or companies. If disasters strike, quality insurance is an important part of having the capacity to recover quickly,” Coutts added.

Households can realise significant savings if they follow these tips for their insurable assets:

Vehicles

• Install a tracking device, which helps reduce premiums.
• Review the value of your vehicle every year at renewal to ensure that the insured amount reflects the reasonable market value of your vehicle as it loses value over time.
• A lower powered, lower value and low theft risk vehicles are some of the factors that influence vehicle premiums.
• Ensure that the gender, marital status and licence information of the regular driver is correctly noted on your policy.
• If you cannot afford comprehensive insurance for your vehicle, it is advisable to, at a minimum, retain third party insurance. Replacing your own car over time is one thing, but potentially having to replace another person’s luxury vehicle can in the long run become very expensive. If you do discontinue comprehensive insurance, also always keep in mind the cost of on-going finance costs if you still owe money on your car.
• Consider taking off car hire if you have it on your policy. This can reduce your monthly premiums, realising savings.
• Also consider taking off any specified items from the policy. Specified items are relatively expensive from an insurance perspective, but if you only keep these items at your home and do not take them away from your residence, they remain insured. This is a risk you can directly manage and can realise real savings on.    

House contents

• Consider adding supplemental security measures such as an alarm system, which can help reduce insurance premiums. 
• Where you live is also important. Moving to a security complex can also influence the premium charged as it impacts a person’s risk profile.
• The insured amount of house contents should represent the new replacement value. If overly inflated, this can increase the premium charged for this cover.
• By limiting insurance cover to only certain insured events can impact premiums charged, but this can also result in the possibility of not being covered for a loss or damage if caused by an event not selected.

Buildings

• One of the factors determining the premium charged for your building is the total value insured amount and the correct value will be represented by the current building replacement cost.
• Similar to contents insurance ensure that the address and the construction of the roof and walls are correctly noted on the policy as it is used as rating factors.
• Implement fire detection and/or sprinkler systems updates and upgrades (including booster pumps and water tanks), to ensure cover in the event of fire,
• Ensure electrical connections / plumbing are completed and approved by registered professionals,
• Ensure fire-fighting equipment is regularly assessed and tested.

Critically, it is important that the budget allocation for municipal infrastructure is maintained at appropriate levels, as it has a direct correlation with household and business finances.

“Household and business finances are significantly impacted by issues such as poor road maintenance, lack of policing, the non-enforcement of building regulations or municipal by-laws. These impact on risk and can directly influence insurance premiums. It is important therefore that appropriate levels of funding are maintained for this critical service-delivery function,” added Coutts.