Are you covered?
As consumers continue to face the ever increasing cost of living, along with the possibility of further interest hikes before the end of the year, many homeowners may be reassessing their financial situation and looking at ways to save money and cut down on costs, says Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa.
“One of the ways in which homeowners can save money is by taking a look at their current home insurance policies and possibly changing their cover,” says Goslett. “While insurance is a necessity for homeowners, this does not mean that it has to be a financially draining burden. Homeowners should shop around and see what options are available to them from various insurance providers.”
Goslett advises that comparing various quotes from an array of insurance companies will give homeowners insight into the options available to them and will help them choose the best cover for the best possible price. “Homeowners have the option of either phoning the insurance companies directly themselves, or using the services of a broker who can source numerous quotes for the homeowner to peruse. Having a number of quotes will give the homeowner the chance to compare apples with apples and the range of various products that each service provider offers. Doing this one thing could assist the homeowner to save money in finding a cheaper option that provides as much, or perhaps more cover,” he explains.
Often consumers will accept the annual increase on their insurance policies without questioning or researching whether there are better and cheaper options that cater to their specific criteria. In fact statistics suggest that only half of all homeowners will investigate their insurance policies when they have been increased. “Research may take some time and effort, but it is always worthwhile to ensure that the current policy is still the best option, meeting all the requirements while offering good value for money. In order to be competitive in the market insurance companies launch new products regularly and are consistently trying to find ways to undercut their competitors. As result it is often possible to find good insurance products at lower rates. Without putting in the effort, it is impossible to know what the best option is,” says Goslett.
Ideally homeowners should review their insurance policies as part of an annual financial assessment. Every year the value of the property as well as its contents vary, so it is imperative that the homeowner’s insurance cover is adjusted accordingly.
With the internet at our fingertips, collecting information and quotes from various insurance providers is a relatively painless endeavour. There is very little that homeowners will not be able to find online. In fact there are centralised sites that will provide homeowners with quotes from different providers without them having to search on other portals. “We live in an age where things are far more accessible. To a large degree the work of finding comparative quotes has been taken out of the process and the procedure has been simplified and streamlined as much as possible. The homeowner will be required to load their details and insurance criteria, after which they will receive a list of all insurance companies and policies they offer which match the requirements. The list will also include the premiums that would be paid by the homeowner for each option. This will quickly paint a picture of which company can provide the best value,” says Goslett.
He provides a few basic elements that homeowners should consider when comparing policies:
1. Check for possible liability cover. This covers any injury or damage done to other people or their property, where the homeowner is at fault.
2. Look at the cover for household contents and personal property. This pertains to all items inside the home that are not a part of the structure itself such as appliances, furniture and clothing. An inventory should be complied to assess the level of personal cover required. Peruse this clause carefully as certain items may be excluded or covered under another type of insurance.
3. Check if there are certain items that need to be specified such as jewellery and laptops/other electronic devices.
After comparing quotes and selecting the appropriate one, Goslett says that homeowners that there are still further ways to decrease the premium such as upgrading the home’s security. “Added or upgrading the home’s security can reduce the monthly premium by as much as 5% in some instances. Certain insurance companies will also reduce their rates if the client is associated with a neighbourhood watch or block watch programme,” he says.
Often preferential premium rates will also be given to homeowners with a low or no claim history. “For this reason, it is best to only make use of the insurance policy when it is absolutely necessary. If possible, it is better to pay for small incidents from a contingency fund and leave the insurance policy for when it is really needed,” advises Goslett. “Homeowners can reduce their premiums by opting for a higher excess on claims; however this would mean having the excess amount put away in savings.”
If there are elements within the insurance policy that need clarification, it is advisable for the homeowner to seek guidance from a professional financial adviser or insurance broker.
“A home insurance policy is a vital aspect of homeownership - paying exorbitant premiums is not. Using these tips and reducing insurance premiums will ensure that homeowners can reduce their costs, while still having their property adequately covered for unexpected incidents,” Goslett concludes.
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