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Combined policies can reduce insurance premiums

21 Mar 2014

Various factors indicate that short-term premiums will increase this year, but the good news is that there are things that consumers can do to offset premium increases.

Martin Janse van Rensburg from Budget Insurance says that consumers could even enjoy reductions on their premiums by making some changes. "Short-term insurance customers are increasingly seeing the benefits of purchasing insurance policies that combine household and motor insurance. In addition to the advantage of less administration, customers are seeing the financial benefits too, as insurers offer discounts for combined portfolios.

"From the insurer's point of view, combined policies work like any other product where 'buying in bulk' offers a financial benefit. The administration costs are lower when a single, combined policy is written, and the cost savings can therefore be passed on to the customer. All in all, combining your household contents and vehicle insurance makes good financial sense," says Janse van Rensburg.

Assistance programmes

Customers taking advantage of a combined policy are also seeing twice the value-adds. They have access to assistance programmes that come with motor insurance, such as Roadside, Medical and Home Assist, plus they have access to the extensions that come with household cover such as the replacement of locks and keys if they are lost or damaged, veterinary expenses if your pet is injured in a road accident and free access to emergency services like plumbers, electricians, glaziers and locksmiths.

Other ways consumers can save on their insurance premiums include:

Insure your vehicle for the correct value: Drivers of older vehicles must ensure that they are not over-insuring their cars. While Budget Insurance takes into account the vehicles depreciated value, not all insurers do, so make sure your vehicle is insured for the correct value.

Update your home contents policy: When it comes to home contents insurance, opportunities to reduce coverage could lie in carefully and regularly updating household inventories. Review your household inventory every six months and adjust the total insured sum accordingly. When you calculate the insured amount of your home contents, make sure you are using replacement values and not market values. Remove old and discarded items that no longer need to be insured from your inventory list.

Don't duplicate coverage: If your short-term insurance company offers free roadside assistance, you needn't opt for the same benefit from your medical aid provider, and if your cell phone is insured under your home contents, you shouldn't be paying for separate cell phone cover.

Increase your security: Your short-term insurance premium is calculated based on your risk profile. Your risk profile is based on a number of things such as where you live, the type of car you drive, and the security interventions you have in place, amongst others. You could reduce your car insurance premium if you've fitted your car with additional safety features such as a tracking device or an alarm, for example. You could receive a reduction on your home insurance premium if you've invested in a new alarm system for your home or if you've moved to a safer neighbourhood.

Don't claim unnecessarily: Keep your insurance for real catastrophes which result in unexpected large losses and avoid claiming for small events that you could cover from your own pocket.

Increase your excess: You could save some money on your insurance by increasing the excess you pay when you claim. Ideally, you want to pay the lowest excess you can in the event of a claim. However, opting for the lowest excess might make your premium too expensive for you. Best practice is to find a balance where you're paying a reasonable premium and your excess is not too high that you won't be able to cover that amount should you need to make a claim.