The holidays are here and as we get wrapped up in the excitement of the festivities it becomes easy to overspend, leaving you high and dry in January. Here are 5 debt help tips to help you stay financially festive.
20 February 2014
If you are looking at ways to trim your insurance costs it is possible to do so. You may even get the right amount of cover that you need just for your individual needs, but you may have to live without certain luxuries or benefits. Angelique Ruzicka speaks to the experts and finds ten ways you can reduce the cost of insurance while still retaining the cover that you need in the event of a disaster:
1. Cut out the theft cover if you don’t need it: If you live in a secure complex or if you are convinced that the security measures you have put in place in your property is very good then you can ask your insurer to take out the theft cover part of your contents insurance. “When people look at contents insurance they automatically think that they need theft cover. They don’t know that they can also only take out fire and storm damage cover. And this fire and storm cover is very cheap because the probability of fire and storm cover is very low. For comprehensive cover of say R250, 000 you may pay a premium of R150 however that can be reduced to R60-R70 a month if you take out the theft cover element. This would be ideal for those who live in a security complex or a flat where the probability of theft is low,” explains Santie Stevens, short term insurance manager for InsuranceBusters.
2. Get insurance that covers the money you owe: “In the last two to three years a limited range of products have come into the market that protect the interests of the bank. So if you’ve had total loss due to theft or write off (after an accident) then the amount owed to the bank would be covered. It’s cheap but very limited cover. Some for instance don’t have third party cover,” says Stevens.
3. It pays to shop around and asking an expert to do it for you: “Sometimes people take out limited cover cause they think it’s the cheapest. But if they used a broker who shops around for them they could end up with a full comprehensive cover at sometimes the same price of the limited cover option,” says Stevens. This applies to other types of insurance, like life cover. “There are instances where you can reduce the amount of cover you need in which case you will pay less in premiums. You may have paid off a significant amount of your bond so you may not need that level of (life) insurance cover anymore. Or your children may be older and may not be as financially dependent on you,” points out Nicholas van der Nest, divisional director, risk products at Liberty.
4. Reduce your car insurance cover if you don’t owe money to a lender: “Many people think insurance is expensive but the reality is that you can take out third party insurance cover which can cost you anywhere between R80-R200 a month,” advises Stevens.
5. Remind your insurer of your car’s value every year: Cars depreciate in value however insurers don’t always reduce the amount of cover you have in line with the value of your car. If you cover your car for less then you will pay less in premiums.
6. Take out the frills: There may be benefits within your insurance cover that you don’t need. If you cut out certain benefits you could pay less in premiums every month. “Review your policy. You can ask to take certain benefits off to reduce the premium such as car hire,” says Stevens.
7. Increase your excess to reduce your premium. This is one sure fire way of reducing the amount you pay every month. The downside of course is that you take on some of the risk yourself. If, for example, your excess is pushed up to R2,000 a month remember that any damage you sustain to your car will be covered by the insurer only if the damage amounts to more than R2,000. If you can afford the excess then this is a good way of reducing the costs.
8. Consider installing a telematics device: Some insurers will reduce the cost of your premiums if you install a telematics device or other security features that will reduce the likelihood of your vehicle being stolen. “Whether an insurer will reduce your premium differs from company to company. It also depends on the car you drive. There is usually an additional theft excess that you have to pay if you car gets stolen. However that gets waived if you put a telematics device in.
9. Take advantage of reward schemes: Some companies such as Oakhurst and Discovery reward the drivers they insure with cash back or other incentives if they drive well. “They install tracking device system which records your driving behaviour. You can get money back for good driver behaviour. It’s called fuel rewards. You could even use that money to reduce your excess. I know of some clients that get half of their month’s premiums back from this programme. But this type of cover can be very expensive to take out in the first place,” warns Stevens.
10. Tailor your policy: If you cut out the cover for other people driving your car and only purchase cover for when you drive the car you can further reduce your premium. “Don’t have an open driver policy option. Rather go for a noted driver policy. This can reduce your premium as the insurance company will only have to cover the risk of you driving your car,” explains Stevens.
Remember that by stripping out benefits and reducing your premiums will result in cheaper cover but it also means that your cover will be basic too. It’s always possible to get the same cover you did before with the same benefits for less if you shop around, but sometimes insurers will want to take benefits away or reduce the amount of risk they take on in return for making you pay less in premiums every month.