Four common insurance questions

Some people spend less time reviewing insurers and quotes than they do when choosing a new pair of shoes. For many, the choice is simple - whichever provider can offer the best price gets their business.  But, choosing an insurer purely on a cost basis is not always the best way to go. Our guest columnist, Robyn Farrell, managing director of 1st for Women Insurance, answers your questions.

1.    What’s the difference between portable possessions insurance and all risk Insurance?

Portable possessions insurance is just another name for ‘all risk insurance’.  Portable possessions cover allows you to claim for items you usually carry around with you every day, which have been stolen, lost or damaged. These items include, for example, your laptop, iPad, jewellery, sunglasses, camera, clothing and other personal items. In fact, you will be compensated for anything that is specified in the schedule under the portable possessions section of your policy.

2.    How often should I update my household inventory?

It’s important to update your household inventory on a regular basis to ensure that any new items are included and to remove items that that you no longer have. If you don’t list the values of your new DVD player or TV, then you would probably not be insured adequately.  

Likewise, it doesn’t make sense to be paying to insure your old washing machine when you have just replaced it with a new one with a higher value. Also, make sure that all your possessions are insured at their replacement value.

The replacement value of goods is what it would cost you, at the time of a claim, to replace all your belongings with similar brand news ones.  If you submit a claim, your insurer will calculate the replacement value you should have insured yourself for.  If you insured your belongings for less than that, your insurer will only pay a part of your claim.

3.    How should I insure my car – market, retail or trade value?

There are pros and cons to each and it is essential to understand what they are.

For new cars, determining the amount to insure is usually based on the purchase value or retail value.

For a used car or a car that is more than two years old, market value, which is the average of the car’s trade and retail values, is often the best bet and this can be determined by looking up current prices for similar models for sale in the newspaper or in one of the car magazines.

The trade value is the amount which a dealer would offer you on a trade-in. This is usually the lowest value.

Motorists must, at all costs, avoid insuring their car below the actual value in an effort to save on insurance premiums. If you have to make a claim, you could then find yourself significantly short on the amount that your insurance pays out compared to the actual amount it will cost to replace or repair your car.

4.    How can I save on my car insurance premiums?

It is easy to shave rands off car insurance premiums, and all it takes is savvier policy management.  

Firstly, it is recommended to have all of your insurance in one place. This means combining motor and household insurance, and insuring all vehicles with one provider. By consolidating all insurance policies under one provider, you could earn valuable discounts on your premium.

You could get a discount on your car insurance premium if you’ve fitted your car with additional safety features such as a tracking device or an alarm.

Increasing your excess amount is also a way to reduce your insurance premium. The excess amount is the first amount payable when you claim. Most people select a low excess amount so that if they have to submit a claim in the event of an accident or loss, the out-of-pocket expense is minimal. That said, consumers can increase the excess amount to the maximum amount they can afford to pay. The higher the excess is, the greater the saving on the monthly premium.

Policyholders can also reduce their coverage to reduce their premiums. For instance, drivers of older vehicles must ensure that they are not over-insuring their cars. While 1st for Women Insurance takes into account the vehicles depreciated value, not all insurers do, so make sure your car is insured for the correct value.