How clients can spring-clean insurance cover and save money

Every year lives change and every year the things we own get more and more expensive to replace. While your clients’ insurance policies are automatically renewed each year, you are by law required to check in with them once a year to revisit their contract. This provides you with an excellent opportunity to guide them in checking whether their cover is still adequate or if there are ways in which they can save money.

Working with an expert intermediary will not only give your clients important peace of mind that they are well looked after, but also gives you the chance to upsell additional coverage, helping you grow your business.

Here are four tips to share with clients in helping them review their cover each year:

1. Adjust the amount they’re insured for

The main reason for reviewing a policy is to ensure that a client is insured for the right amount – what insurers call the ‘sum insured or limit of indemnity’. This is especially relevant if a client recently got married, made some home improvements or upgraded their vehicles.

A client may have acquired many new items that they could have forgotten to add to their policy or specify, such as a new bicycle or jewellery. Remind clients to either increase the amount of their coverage to avoid being underinsured, or to specify expensive items. 

2. Avoid being underinsured

This may sound obvious, but, with the exception of vehicle 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 would cost R20 000 today, so a client could be left very disappointed when they leave the shop with an inferior and smaller couch than the one it replaced.

For this reason, insurance companies usually automatically adjust the sum insured each year so that the covered amount keeps pace with inflation. This should be made clear in a policy document and pointed out to clients. In other words, when premiums increase, it’s to protect a client against being underinsured.

3. The structure of a home

If a client enhanced the value of their home by replacing a roof, redoing a kitchen or installing a swimming pool, they must increase the amount their house is insured for too. Both the house (the structure) and the belongings inside (the contents of a home) must be insured at their replacement value – that is, what it will cost your client, at the time of a claim, to replace/rebuild the building or belongings with similar, new structures or items.

4. Check vehicle cover

Cars should always 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 a client is uncertain of what their car is worth, contact us directly for assistance. We will help them work out the reasonable market value with the help of a car calculator provided by Santam.

Instead of insurance ‘ticking over’ each year, encourage your clients to sit down with you once a year to review their policies. It will strengthen your relationship and it might even save them money in the long run. If you would like more information on Santam insurance, speak to your relationship manager or contact us. For more advice tailored to intermediaries, visit our blog.