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5 reasons to review your insurance policy at the start of a new year

File Image: IOL

File Image: IOL

Published Jan 27, 2022

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With the start of a new year comes the motivation to tackle our aspirations for the months ahead. But as we set new health, career, or life goals, what often goes unnoticed are our insurance policies. Because “life events” like purchasing a new car, renovating your home, moving house or relocating to a new area/town/province, or gifts received over the festive season can trigger a change in your insurance requirements, it’s important to regularly evaluate and shift your policies with your lifestyle goals.

Reviewing your policies every year helps you to assess whether your insurance needs have changed, and whether you need to streamline your insurance policies. This can save you money by reducing your policies and premiums, consolidating policies, or filling gaps in areas that need additional coverage.

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“What better time than the start of the year to think about your insurance requirements? Start by looking back at the previous year and think about events that have transpired so you can align your insurance requirements. This will help mitigate the risk of being over or underinsured and will help you avoid any nasty surprises in the year ahead,” says Dr Hardy Ncube, Head: Personal Products at Standard Bank Insurance.

With the advent of Covid-19, many of us have been through more life changes than usual. You may have changed jobs, started a new business, had your parents move in with you or sold your car because you are now working from home. Travel and entertainment limitations may have favoured expenditure in other areas, such as home renovations, new appliances, or investments in art and luxury goods.

Dr Ncube suggests considering the following when evaluating your policies, to ensure that nothing slips under the radar, and to make sure you aren’t paying for something you don’t need.

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Life events require policy updates - The birth or adoption of a child, inheritance of heirlooms, changing jobs, moving homes, starting a business, or buying and selling assets are some of the factors that will shift insurance requirements. Depending on the circumstances, these events could increase or decrease your insurance requirements. Assets such as jewelry and electronics that have been acquired over the festive season should be correctly specified when updating your insurance policy. Additionally, those who have moved homes should update their addresses with their insurers.

Wear and tear could affect your premiums – Make sure your assets are insured at the right replacement value and not the original purchase price. Cars, furniture, and electronics are all assets that usually lose value over time, but the replacement value could also increase due to fluctuating exchange rates and shortage of goods. Doing regular valuations and policy reviews on these items will help to make sure that you are correctly covered at the replacement cost, which may be higher or lower than the original purchase price.

Home enhancements could leave you underinsured – Any home improvements and renovations may enhance the value of your home. As such, policies need to be adjusted to reflect higher values. Your policy should also correctly account for the contents of your home and any valuable items you may have acquired after your last policy update. If this is not done correctly, it could leave you underinsured and a pay-out from a claim may not cover or replace the full value of the assets.

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Less risk means more savings – All insurance policies are priced by calculating the risk factors involved. Ultimately, decreasing your risk will decrease your insurance premiums. For example, a security system may decrease some of your home’s risk factors and thus your insurance premiums.

Take lifestyle shifts into account – The shift to hybrid and remote working has resulted in fewer people travelling between home and work every day. This means that monies saved from paying less on car and home insurance can be used in other areas such as increasing your monthly bond repayments or emergencies savings.

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