5 Insurance Mistakes to AVOID
Saving money is great when it comes to your insurance, however simply reducing your cover or dropping important coverages altogether is not a great idea, being focused only on numbers and not on the end result can place you in very hot water at claim stage.
It is vital to be aware of the pitfalls, below are 5 important insurance mistakes to avoid.
It is vital to be aware of the pitfalls, below are 5 important insurance mistakes to avoid.
1- Insuring your building for its market value rather than the cost of rebuilding.
Insurance is designed to cover the cost of rebuilding, not the sale price of your home.
By not considering this you could be at risk of under-insurance.
2- Selecting an insurance company by price alone.
Competitive prices are important. BUT be sure the insurer you choose is right for your specific risk and that there are not gaps in your cover. Having peace of mind is priceless.
3- Underinsuring your building and contents.
It is important to insure your building and contents at the correct replacement value, if you are under-insured the insurer will apply the rule of average at claim stage, which means you will be paid out substantially less.
An example of application of average is:
- Tom has a house and the house is insured for R200 000-00.(sum insured);
- The cost to completely rebuild the house if completely destroyed is R300000.(value at risk)
- There is a fire and the cost of the repairs is R60 000-00 (the loss);
The amount that will be paid (settlement) is:
R200 000-00 x R60 000-00 = R40 000-00 (Settlement)
R300 000-00
4- Not being aware of what your excesses are.
Again, low premiums do not always equate to the best cover. Always make sure that you know what your excesses are on your policy so as not to get a nasty surprise at claim stage. In many cases you can get a quote with low premiums but the excesses can be very high, this can set you back financially in the event of a claim.
5- Insured vehicle not being roadworthy.
A vehicle that complies with existing road traffic laws of the country, and is in a fit condition to be used on a public road, is considered roadworthy. It is a condition on your insurance policy for your vehicle to be roadworthy. If it is found that your vehicle is not roadworthy it will negatively affect your cover and a claim could possibly be repudiated because of this.
We here at SBS provide our clients with a combination of excellent service, advice and competitive premiums. We pride ourselves with the attention to detail when it comes to placing a client with the right insurer and cover that will give your peace of mind. Communication and transparency are key.
We hope you enjoyed our article today, please see below our insurance definition of the week to continue our knowledge expansion of the insurance language for our valued clients.
Insurance is designed to cover the cost of rebuilding, not the sale price of your home.
By not considering this you could be at risk of under-insurance.
2- Selecting an insurance company by price alone.
Competitive prices are important. BUT be sure the insurer you choose is right for your specific risk and that there are not gaps in your cover. Having peace of mind is priceless.
3- Underinsuring your building and contents.
It is important to insure your building and contents at the correct replacement value, if you are under-insured the insurer will apply the rule of average at claim stage, which means you will be paid out substantially less.
An example of application of average is:
- Tom has a house and the house is insured for R200 000-00.(sum insured);
- The cost to completely rebuild the house if completely destroyed is R300000.(value at risk)
- There is a fire and the cost of the repairs is R60 000-00 (the loss);
The amount that will be paid (settlement) is:
R200 000-00 x R60 000-00 = R40 000-00 (Settlement)
R300 000-00
4- Not being aware of what your excesses are.
Again, low premiums do not always equate to the best cover. Always make sure that you know what your excesses are on your policy so as not to get a nasty surprise at claim stage. In many cases you can get a quote with low premiums but the excesses can be very high, this can set you back financially in the event of a claim.
5- Insured vehicle not being roadworthy.
A vehicle that complies with existing road traffic laws of the country, and is in a fit condition to be used on a public road, is considered roadworthy. It is a condition on your insurance policy for your vehicle to be roadworthy. If it is found that your vehicle is not roadworthy it will negatively affect your cover and a claim could possibly be repudiated because of this.
We here at SBS provide our clients with a combination of excellent service, advice and competitive premiums. We pride ourselves with the attention to detail when it comes to placing a client with the right insurer and cover that will give your peace of mind. Communication and transparency are key.
We hope you enjoyed our article today, please see below our insurance definition of the week to continue our knowledge expansion of the insurance language for our valued clients.