This year, why not make it a goal to make the most of what you have, by ensuring no emergencies or unforeseen events can impact your financial plan? Short-term insurance is a vital part of being able to do this. It’s so important to allow yourself time to consider your insurance needs properly.
Assessing your financial portfolio and insurance policies may be putting your needs first, but the benefits extend to any family members and loved ones who would be impacted if you were to face financial difficulty. Just like you’d put your own oxygen mask on first before helping others in an emergency on board an aircraft, it’s good to prioritise your personal admin. Take the time to give yourself – and those close to you –a secure financial safety net.
Look at what you own
Assessing your contents as a whole is a very important exercise. With the festive season just behind us, there may be a new gadget or piece of jewellery that should now be part of your All Risk cover (cover for items you carry with you outside your home). Perhaps you have an upgraded appliance that means your contents cover needs to increase.
If you don’t factor in the replacement cost of anything new, together with what you already own, you won’t have proper protection in place. Also consider that over time, most goods go up in price. You may therefore need to increase your cover on your current goods to reflect realistic replacement values, even if they have aged.
Can you clear the clutter?
You may use the beginning of a new year to reassess what you own in an effort to downscale and clear the clutter. In this instance, consider whether you may be over-insuring by including goods you no longer need or want. Removing a laptop that you gave away from your All Risk cover or realising your home contents are worth less overall (because you were able to sell or donate some items) could mean that you can make adjustments to your policy to enjoy a lower insurance premium.
Taking stock of what you own and whether you really need or use it all may also hold benefits to support other resolutions. Clutter can cause anxiety, and even though some of us thrive in chaos, being more organised often has far reaching benefits – both financially and otherwise.
Consider cover carefully
Some people try to practise ‘self-insurance’ by only taking out enough insurance to cover some of their belongings. The idea is that they are then prepared to pay for the rest of their belongings themselves if they need to replace them. In theory, this may sound like a good way to minimise your insurance premium, but it doesn’t work practically. Remember that for your contents cover, your insurer considers all of your contents collectively.
So, the cover you put in place should be enough for this collective amount, even though you may only claim for some of your contents in a crisis. If you are found to be underinsured overall, any claim will be paid based on the principle of average. For example, if your overall contents are underinsured by 20% and your television is stolen, your insurer will only pay 80% towards your replacement television.
On track and up to date
It’s important to check in on your building insurance too, ensuring it extends to cover replacing your home entirely, in the event of worst-case scenario. If you have an alarm system, make sure it’s working with back-up batteries in place. If you have a tracker in your vehicle, check those batteries as well.
Depending on the various features or accessories at home or on your vehicle, check that the essentials are covered, and that any maintenance needed is done as soon as possible.
Get the guidance you need
Touch base with your adviser to ensure you’ve considered all angles and get the policy best suited to your needs. Knowing you are fully covered and in a position to withstand financial emergencies can go a long way to ensuring financial peace of mind.
[Bertus Visser, Chief Executive of Distribution at PSG Insure]
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