![]() When it comes to annual contract renewal time, short-term insurance policyholders will often receive a notification from their insurance company of a premium increase. Understanding the reasons why a premium increases can better equip a policyholder to negotiate a lower premium increase. This is according to Christelle Fourie-Colman, Chief Executive Officer of MUA Insurance Acceptances, who says the short-term insurance market has become increasingly competitive over the past few years and consumers are now spoilt for choice when it comes to providers. “As a result, renewal of a policy is a time when South Africans traditionally shop around, but it is important to understand the difference between inflationary increases on sums insured and actual premiums increases, in order to avoid inadequate cover from a cheaper provider.” Inflationary increases on sums insured, such as a home, its contents and all risks (the belongings the policyholder carries with them outside of the home e.g. a mobile phone or laptop) is not technically a premium increase, she explains. “The cover for these belongings is heavily influenced by the Consumer Price Index (CPI) and the reason why insurers have to increase the sum insured (the value of the cover) is that these items will cost more to replace or repair a year later due to inflation.” She says sum insured increases will typically give the policyholder more cover at the same rate. “For example, the insurer will increase the policyholder’s building value by 6% and then the monthly premium for building will also go up by 6%. This is done to ensure the policyholder has adequate cover and that they will not be subjected to the average condition when submitting a claim.” The value of items such as jewellery are very important to adjust upwards as these belongings are greatly influenced by fluctuations in cost of precious metals and stones as well as the impact of Rand, she adds. When it comes to premium increases at contract renewal time, insurance companies will review the frequency, severity and type of claims experienced by the insured during the past year and then the premium or insurance rate will be adjusted upwards according to this data. “This can result in a higher premium being paid for the same amount of cover, especially if the insured has claimed quite often during the period,” she says. It is a good idea for policyholders to ask how their premium will be affected at renewal before submitting smaller claims, as often it is not worth claiming when considering the annual increase in premium as a result, she says. “In addition, insurers will more often than not also impose an inflationary increase on the actual rate to ensure premiums remain adequate to cover projected claims.” Often an increase due to claims as well as an increase in property sum insured value can compound the effect of the increase, says Fourie-Colman. “This is why it can seem as if the increase is above inflation but in real terms it is not the case.” When it comes to motor insurance, policyholders often find this aspect of insurance often most confusing, as the market value of cars typically reduce but premiums tend to increase at renewal, she says. “Insurers do take the value of the vehicle into account when calculating a premium, but it is by no means the only factor which determines the premium. The majority of claims paid (as much as 80% of total claims paid) are for accidents and not write-offs or stolen vehicles. So one of the main factors in determining motor premiums is the actual cost of repairing the vehicle. The cost of parts and repair are heavily influenced by fluctuations in the Rand due to the fact that most motor parts are imported from foreign countries. The prices of the parts also constantly increase with inflation.” As a result, we have to increase our premiums every year, regardless of whether the insured claimed or not, to cater for the increase in the cost of repairing accident damage, explains Fourie-Colman. She says most insurers will be prepared to renegotiate renewal increases if a good client is not happy with the increase proposed. “If the policyholder looks after their insurance claims record, they will be in a position of power to successfully negotiate increases down, without having to change insurers. However, policyholders must make sure they are not confusing sum insured increases where they get more cover with actual rate increases. “Another word of caution, not all insurance policies are created equal. Typically by paying less, the policyholder will have less cover and it is therefore vital to do a proper comparison of cover. Check excesses, driver restrictions, policy cover and limits of extensions. When in doubt, it is always a good idea to ask a broker for help,” states Fourie-Colman. Finally, Fourie-Colman provides the below list of tips for consumers to evaluate whether they are paying an optimal insurance premium; • Review your policy and shop around when it comes to renewal time; • Be sure to compare apples with apples; • Only consider dealing with insurance providers who are prepared to guarantee your insurance premium for the annual term, regardless of claims filed; • Consumers should not claim for every single little loss as most insurers also consider the frequency of claims that the client submit, even though it is for small amounts; • Do revalue and adjust the value of jewellery in the insurance policy at times when the rand is under pressure. This will ensure that the increased replacement value is adequately catered for; • Do not move insurance providers for a small saving in premium. Rather ask your current insurer to reconsider and adjust your premium if needs be. A long standing relationship with your insurance company can come in very handy when experiencing challenging times; • It is always worthwhile to deal with a broker who could add weight to negotiating premiums. To get price comparison when you have a renewal, please contact Jan or Po-Lin in our Short Term department [email protected] tel no: (011) 658 – 1333 Source: FA News
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![]() The other day while driving we noticed a huge advert which indicated that cheap insurance price is the way to go”. Now, three short-term insurance brokers seated in one car can create some interesting conversation. I was the first one to pipe up saying that of course that is simply not true. Next, I said that unfortunately a large portion of our buying public thinks in the same way. I will explain to you why this is the case. Three months ago, someone approached us for insurance quotes for his motor vehicle, following a shocking discovery on his existing policy with another insurer. His car is currently the most popular German hatchback in South Africa, read: a perfectly normal new car. What he discovered was that he had a basic excess (also known as first amount payable) of R27500!!! He was paying a super cheap premium for a month with them. He supplied a copy of his policy to us and I can tell you that the excess is displayed on the second last page out of many pages, almost as if they are trying to hide it from the client. Thank goodness, he discovered this fact before he had any claim. Here comes the equally (if not more) interesting part: the client subsequently took out a policy through our brokerage, paying approximately 65% more in premium. How many clients are willing to pay more for… less? This client certainly is. Less excess that is. Now: please tell me Does price really rule? Let’s say the client had an accident with damages totaling let’s say R35000 (the cost of a perfectly normal repair job in SA… for a small accident). Would he have got anything worth claiming for back from his old insurer? Off course not. This brings me to a conclusion that what matter most is that the client is covered and come claim stage it is affordable. Now let’s say it all together, Let’s say it all together now: Price does not rule but Cover rules! To get a comparative quote done please contact Jan in our Short-Term Department email [email protected], tel (011)658 -1333 Source: Jan Prinsloo (Daberistic Short-term Broker) ![]() The new vehicle licence regulation specifies that no motor vehicle can be bought or sold with an expired licence disc. This means that, insurers, cannot write a vehicle off if it has an expired licence disc on the write-off date. Please take note of the below process as it will take immediate effect on all write-off claims. What this means for your clients Insurers cannot renew a licence disc on behalf of a client. As a result, as the client you must assist in renewing the licence disc if it has already expired or expires during the claim process. What happens when the licence disc expires after the date of loss? If the licence disc expires after the date of loss, but before the claim is settled,as the client you will will need to renew the licence disc and send proof of renewal to insurer before they settle the claim. Insurer will reimburse the cost of the renewal in the claim settlement amount. What happens if the licence disc expired before the loss date? If the licence disc expired before the claim event, it is the client’s responsibility to renew licence disc. Insurer will settle the claim once the client has sent proof of renewal. To get assistance with a claim, quote as well a reviewing policy schedule for your vehicle, home and business contact Jan in our Short-Term Department; email [email protected] ,tel (011)658 -1333 Source: Discovery insure ![]() When times are tough, we understand that people try to save money wherever they can. But never compromise on quality insurance of your most prized possessions. At Santam, we feel there are always ways to structure your policy to suit your pocket so you’re properly covered and we can pay your claim. Let’s look at ways to do this. How to afford quality insurance First of all, do a quick run-through of your lifestyle, profile and assets. These are the factors that determine how much you are charged every month. Things change all the time – for example, you may have installed extra security measures around your home and not told us, or you’ve changed jobs and your car is now parked in an underground garage instead of outdoors. Perhaps your student daughter now has a job and no longer lives in a high-risk city area. Just by updating your profile, you may find that your premium decreases or that you risk profile has changed. Saving on car insurance premiums Consider Third Party Only car insurance: This is the minimum amount of cover you can give your vehicle, making it the cheapest there is. Raise your excess payment: The greater your excess is, the lower your premium. During the quotation process, you will be asked to select the amount of voluntary excess you will be prepared to pay in the event of a claim. Although there is a compulsory excess amount, you can always choose to increase this. This would mean paying more out of your pocket, so make sure you can afford the higher excess amount. Pay for smaller damages yourself: If you are able to keep a rainy-day fund for smaller nicks and dents, you will manage to stay claim-free for longer and get a big reduction on your premium. Make sure the correct person is noted as the regular driver: Your risk factor is determined by the person who most often drives the car, so be sure to keep this information updated. Install additional security features: Although we know this means spending more money, drivers who install tracking systems in their vehicles could benefit from a lower premium. Vehicle tracking technology could also impact your risk profile, as it will be easier to recover your car in case of a theft or hijacking. How to reduce home insurance payments Increase your excess payment: The greater your excess is, the lower your premium. During the quotation process, you will be asked to select the excess you will be prepared to pay in the event of a claim. Although there is a compulsory excess amount, you can always choose to increase this. This would mean paying more out of your pocket, so make sure you can afford the higher excess amount. Pay for smaller damages yourself: If you are able to keep a rainy-day fund for smaller repairs, you will manage to stay claim-free for longer and reduce your premium. Upgrade security features: Installing a home security system or upgrading your existing security measures can decrease insurance premiums – plus ensure that you are safer. Also join a neighbourhood or block watch, as some insurers will offer reduced rates to homeowners who belong to these types of organisations. Tip: Combine your car, home and building insurance to reduce your insurance premium. To get a quote and cover that will be sufficient for you please contact Sandy in our Short – Term Department, email [email protected] , tel (011)658-1333 Source: Santam They say ‘you get what you pay for’ which is why when it comes to car and home insurance cheaper is not always better. There are quite a few factors to consider when deciding on your short-term insurance provider and if you’re making this decision based solely on price, it could end up costing you more than you bargained for.
Ask yourself the following before making a decision:
Insurance to suit your pocket and needs Your insurer should be able to structure and adjust your policy according to you needs. This means that you must be able to actively manage your cover and have the flexibility to change it whenever the need arises. If you for instance decide to remove additional cover from your policy so that it better suits your circumstances or decide to increase your excess to see how much it could lower your monthly premium, you should be able to do so. There is a reason why claims are often called the moment of truth You should be able to rely on your short-term insurer for a positive claims experience. Santam has paid 99% of claims made in the past year. We do this by looking for reasons to pay, rather than reasons not to.In fact, we are South Africa’s largest short-term insurer, covering over R4 trillion worth of risks. This means we are capable and have experience to deal with your claim. Click here to read more Please contact Thomas or Innocentia in our Short Term Department; email [email protected] , to get your personalised Santam quotes Source: Santam We take out insurance on our car with the expectation that we will be covered (depending on our specific plan) in the event of an accident. However, there are certain cases where insurance companies refuse to provide cover, due to a number of reasons which will be discussed in this article. Make sure that you don’t fit into any of the cases below, if you want to avoid being in a tricky situation where you don’t get the cover which you agreed to.
Be truthful about previous convictions: It is important to be truthful about previous convictions. If you, as the policy holder, withhold vital information in the hopes of receiving a lower premium, the insurance company will not cover you in the event of an accident if they learn that you have not been truthful. Don’t be misleading about who the main driver of the car is: Often, people try to cut their premium payments by being dishonest about the main driver of the car. This usually happens when an inexperienced or young person is the main driver of the car. Make sure that you are honest about this as it can cause your insurance company to not cover you if you are found out. Inform your insurer about all previous claims: It is important to inform your insurer about all issues regarding previous claims, as by not doing this, you are violating the insurance principal of utmost good faith. This includes the following: any modifications that have been made to the car, which could affect its safety or value; a change in your car’s usage; and providing a false address as to where your car is kept. Report a claim immediately after an accident has happened: If you do not report a claim immediately after your accident has happened, the insurer may rule your claim out and refuse to offer compensation. Therefore, be sure not to wait too long to report an accident and file a claim. In summary, it is important to be honest with your car insurance company, in order to avoid tricky situations where you find yourself being refused cover when you need it most. Follow these basic tips and there will be no need to worry! Source: Carinsuresa Insurance can be a tricky business and it’s probably because of this that there are so many myths floating around about insurance and how it works. Here are some myths explained;
1. My insurance will pay off my vehicle finance if my car is destroyed If your car is financed, you will find that this is not necessarily true. When insurance companies pay for a written-off vehicle, the payment is based on how much the car is worth at the time of the accident. Seeing as your vehicle loan is based on how much your car was worth when you bought it, the insurance amount paid out may not be close to your loan amount because cars generally depreciate quicker over time – faster than the rate at which you are able to pay off your loan. Your loan also includes financing fees and interest, which are not covered by your insurance. Some insurers might offer a top-up insurance policy that can cover most of the shortfall between the insured amount and the loan amount. This is usually optional, so remember to select this cover if you need it. 2. I don’t need insurance Even if you are a fantastic driver or a very conscientious home owner, the fact is that accidents happen and possessions get stolen. Whether an event like this is your fault or not, it could cost you money that you might not have to get your car or home repaired or to replace your stolen items, for example. There are a variety of insurers out there that offer a selection of prices and policies. In fact, getting a quote these days is quite painless and you get to find out just how much you will pay in the end. Everybody needs insurance and very few will be able to afford what they lost without the help of insurance. If you are concerned, but are not sure how to proceed, it’s best to contact a financial adviser who can give you proper advice regarding your insurance needs. 3. My car’s colour will affect my insurance premium Most insurers don’t care about the colour of your car. In fact, they are more interested in knowing whether you’ve had any accidents before, the type of vehicle you have, the car’s age and a variety of other factors. To make sure, ask your insurer if they use the colour of your car to determine your premium. 4. I should get building insurance based on my property’s real estate market value You should get building insurance based on the following:
Source: Discovery Please contact Thomas or Innocentia in our Short Term Department; email [email protected] , to get your personalised car and household insurance quotes. |
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January 2025
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