The New Year’s resolutions you need to keep
Insurance musts for the year ahead
A new year, a new you? Or maybe not.Unfortunately, New Year’s resolutions tend to be doomed from the start, with a 2024 Forbes study citing that the average New Year’s resolution lasts only 3.74 months. While many of us make wellness-related commitments at the start of each year, goals around the health of our finances, particularly insurance, are just as important and may even be easier to achieve than a year without chocolate.
Your contract with your short-term insurance company is automatically renewed every year. Yet a lot can happen in 12 months. Despite this, many people simply allow their policy to “tick over” without reviewing it to ensure they are still adequately covered.
As life changes, so do your insurance needs
Resolving to review your insurance policy at the start of each year helps ensure you maintain the right level of cover and could even save you money in the long run. An annual review allows you to keep your details up to date and ensure your cover aligns with your current circumstances, helping to prevent both underinsurance and overinsurance.
This proactive step protects your assets and may reveal opportunities to optimise your premiums. It is a financial health check everyone should prioritise.
January is a good time to dust off your insurance policy, give it a thorough read and complete the following checks:
Keep your wheels protected
Your car should be insured at a “reasonable market value”; in other words, the retail value a dealer would sell it for. This typically takes into account the vehicle’s age, mileage, condition and any extras. While cars are rapidly depreciating assets, this can work in your favour when it comes to insurance premiums.
As your vehicle depreciates, the insured value on your policy may no longer reflect its current worth, meaning you could potentially reduce your premiums as the car ages.
When reviewing your car insurance, also reassess your cover options. If you initially opted for third-party or limited cover, it may be worth considering comprehensive cover for greater peace of mind on the road.
Leading insurers usually offer a wide range of optional benefits for vehicle cover, similar to those available for home insurance. These may include cover for credit shortfall (with or without residual value), vehicle hire, and accidental damage to tyres or rims.
Check the amount your home is insured for
If you have increased the value of your home by adding solar panels, replacing your roof or renovating your kitchen, you need to increase the amount your home is insured for accordingly.
Your house (the structure) and your belongings (the contents) should be insured at replacement value. This is the cost you would incur, at the time of a claim, to replace the building or contents with similar, new items. In most cases, this amount is higher than people expect.
Do a home contents review
One of the main reasons for reviewing your policy is to ensure you are insured for the correct amount — what insurers refer to as the “sum insured” or “limit of indemnity”.
Over the past year, you may have acquired additional assets or valuables, such as a new bicycle, laptop or household appliances, or upgraded your home security. If so, now is the ideal time to adjust your home contents cover or add it if you only have building insurance. Be sure to note any security enhancements, as these can affect your premium.
It is also important to remember that building insurance generally covers structural damage caused by events such as fires, extreme weather or burst geysers. Home contents insurance provides additional protection for items inside the home, including furniture, electrical appliances and other valuables.
Your insurer should offer sufficient flexibility to tailor home contents insurance to suit your budget. For example, Santam policies allow you to choose cover options based on your needs, including protection for washing on the line, cash kept on the premises, and the personal belongings of domestic workers or guests.
By reviewing what you are covered for as part of your annual financial wellbeing routine, you can ensure you have the right protection as your lifestyle and circumstances evolve.
* Franco Feris is the Chief Executive Officer of Santam Namibia Limited.
