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Never cut back on your insurance

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Times might be tough but trying to save money on cover is a false economy

The economic environment is impacting people and households across the country but don’t ever economise on insurance.

Policies need to be kept up to date as part of managing expenses, says Bertus Visser, chief executive of distribution at PSG Insure.

Reducing insurance cover or cancelling policies to improve cash flow might seem cost effective but that will not be the case if you need to claim for damages or losses.

“In fact, a large loss without insurance cover could be detrimental to your financial future and truly deter you from managing economic knocks.”

Visser suggests six steps homeowners should take to keep both their insurance and financial well-being on track

* Don’t discover you have too little cover too late: Ensure that your level of cover is sufficient – when misfortune strikes, there is little worse than submitting a claim, only to find that you are not fully covered.

“Be sure to consider all the relevant risks and to allocate the necessary budget to adequately cover your home, vehicle and personal contents.”

* Keep it business as usual. Business owners should consider more than the overall replacement value of their property, buildings, equipment and average level of stock, Visser says.

“Factor in expenses such as escalating building costs (on average higher than standard inflation), rising replacement costs of imported stock, peak-period stock levels (when you might need to adjust your cover) and the costs of rubble removal if your premises are damaged by fire or flood.”

* Keep personal cover current: While insurance cover is unlikely to be the first thing people think of when changing jobs or buying something special, Visser says it is critical that you inform your broker as soon as possible of any significant changes in your circumstances, such as where your vehicle will be during the day, or specifying an expensive item.

* Don’t underestimate the cost of claims: “Any item you bought this time last year is likely to cost more today. So, having insured it at last year’s purchase price, you won’t be able to replace it at today’s cost if it is damaged or stolen.”

This makes regular, thorough policy updates critical, he says.

* Realise the rand reality: Property owners should take stock of how much of their household goods and decor are imported. At home, it may be a flat-screen TV, laptop or expensive fittings and at the business premises it may be trading stock, specialised machinery or even cleaning equipment.

“Consider all items that could cost more to replace using a weaker rand and account for the differences in your insured values and realistic replacement costs.”

* Remember your responsibilities: Visser says property owners must provide correct information for their insurance cover and disclose all relevant details and accurate estimates of value.

“If you are not confident to verify this information, many insurers can assist by sending appraisers to value your insurable property or goods,” he says.

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