10 tips to reduce your car and home insurance premium

Widely reported data shows that more than 6.6 million vehicles on South Africa’s roads are uninsured, while some homes are underinsured by up to 60%.

According to Budget Insurance, an alarming amount of South Africans would need to pay thousands of rands from their own pockets if their vehicle were in an accident, or if their home was burgled or destroyed.

Approximately 70% of the roughly 11 million registered vehicles in South Africa (excluding caravans and trailers) are uninsured. That equates to two out of every three vehicles on the road. When it comes to homes and household contents, some South Africans are underinsured by as little as 14%, to as much as 60%, according to Budget Insurance’s data.

“During tough financial times, some choose to cancel their insurance to save money. This puts them at a massive financial risk considering the number of accidents, hijackings and thefts that take place daily,” said Susan Steward, spokesperson for Budget Insurance.

“Not many people can afford the thousands, to tens and even hundreds of thousands of rands to replace home contents after a burglary, repair their car after an accident or replace it after a hijacking. Not to mention the third party costs, or fees involved if the other party decides to take legal action.”

Steward said that there are a few tweaks you can make to reduce your monthly insurance premium while still remaining insured:


1. Insure your vehicle for the correct value

Drivers of older vehicles must ensure that they are not over-insuring their cars. While Budget Insurance takes into account the vehicles depreciated value, not all insurers do, so make sure your vehicle is insured for the correct value.


2. Update your home contents policy

When it comes to home contents insurance, opportunities to reduce coverage could lie in carefully and regularly updating household inventories. Review your household inventory every six months and adjust the total insured sum accordingly.

When you calculate the insured amount of your home contents, make sure you are using replacement values and not market values. The replacement value is what it would cost you, at the time of a claim, to replace all your belongings with similar brand new ones.

Remove old and discarded items that no longer need to be insured from your inventory list. Why should you pay for coverage on a computer that stopped working in 2013? Similarly, the costs of some appliances and gadgets have come down in price so you really shouldn’t be paying to insure an item that was more expensive when it first hit the market than it is nowadays.


3. Don’t duplicate coverage

If your car or home insurance company offers free roadside assistance, you needn’t opt for the same benefit from your medical aid provider.


4. Increase your security

Your car, home or buildings insurance premium is calculated based on your risk profile. Your risk profile is based on a number of things such as where you live, the type of car you drive, and the security measures you have in place, amongst others.

You could reduce your car insurance premium if you’ve fitted your car with additional safety features such as a tracking device or an alarm, for example. You could receive a reduction on your home insurance premium if you’ve invested in an alarm system for your home or if you’ve moved to a safer neighbourhood.


5. Don’t claim unnecessarily

Keep your insurance for real catastrophes which result in unexpected large losses and avoid claiming for small events that you could cover from your own pocket. When you claim for every little scratch, your insurance provider will raise your premium to reflect the higher risk you pose.


6. Increase your excess

You could save some money on your monthly insurance premium by increasing the excess you pay when you claim. Ideally, you want to pay the lowest excess you can in the event of a claim.

However, opting for the lowest excess might make your premium too expensive for you. The best practice is to find a balance where you’re paying a reasonable premium and your excess is not too high that you won’t be able to cover that amount should you need to make a claim.


7. Combine your policies

By insuring your car and home contents, or your car and buildings insurance with the same insurance provider, you could qualify for a discount.


8. Shop around

For example, a bank will often put great pressure on a homeowner to insure through its associated insurance company, but the truth is that it does not matter which insurance company you use, as long as you insure your home. This leaves you free to shop around for the best deal.


9. Review your cover on a regular basis

As your individual needs change so may your insurance needs. For instance, you may no longer need full comprehensive cover on an older or second vehicle and may want to consider insuring it for Lite cover.


10. Make sure you keep your details updated

Insuring your vehicle for private use if you no longer use it for business, or if your vehicle is now parked in a more secure environment overnight, like inside a locked garage, it will save you money so let your insurer know.


Read: The best insurance companies in South Africa

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10 tips to reduce your car and home insurance premium