Be informed when insuring

Santie Stevens, an insurance broker at InsuranceBusters(FSP No: 32984, an Authorised financial provider) says: "When it comes to buying a product that needs insurance, consumers are often overwhelmed by all the paperwork and legal terms, that they simply sign without really understanding what they are buying."

South Africans must not feel pressurised into buying insurance without considering all of their options, knowing what they really need and fully understanding the various policies.

Stevens adds "The problem is that the insurance may be included in your payment contract automatically. For example, customers should have the option of insuring furniture under their own household insurance policy (which may be a cheaper bet). If you have comprehensive household insurance you will need to provide proof to the store that you have taken out insurance. The cost of insurance through a furniture dealer can be very costly as you are paying insurance for the item only and will pay this insurance for the contract term. To add insult to injury, you will pay interest on this insurance cost as the furniture stores pays the insurance upfront and they are entitled to charge you interest."

"If you have a household insurance policy, include your purchase in your policy so you will not have to pay the store for insurance. Do an inventory of all your contents at least once a year. Remember to take into consideration the contents in your outer buildings and garage. The inventory must be done on old for new prices because average is applicable. Another important item to remember is the excess you will pay should something happen to the item purchased. On a standard Home Contents insurance policy some insurers have a nil excess whereby the furniture stores may have rather high excess. Always compare the excesses between various insurance companies, for some insurer will increase the basic excess to decrease the monthly premium."

"Most importantly make sure you read the fine print on the sales agreement. People rush through the paper work without acknowledging what the contents entail."

She provides the following advice:

• Always make sure you receive a copy of the policy document
• Make sure that you understand every detail about the policy, and ask as many questions as you need to.
• If you feel that your questions are not being answered, contact your insurance broker for professional advice.
• If you ever have any reservations about a financial services provider, check to see if they are registered with the Financial Services Board.
• Always remember that according to the National Credit Act, you are under no obligation to use the insurance company offered by the product seller.

Finally, Stevens adds that insurance is supposed to be there as your safety net and providing peace of mind, not as an added unnecessary expense. Make sure that your needs are met by being precise and communicating properly with your insurance company.