The ins and outs of insurance

Vehicle insurance is therefore essential. Because it is hugely inconvenient to be without a car when yours is being repaired, consider including car hire in your insurance policy. However, if you do nothing else, at least take out third party insurance.

Home contents
You are covered for items stolen from or damaged at your home. The policy may also cover food spoiling in the freezer because of a power cut, theft of washing or garden furniture, and accidental breakage of mirrors, windows or a television set. Find out how many of these extras your insurance does in fact cover.

Portable possessions
These are items you would normally carry with you such as clothing, cameras or cellphones. You will need to specify items valued at over a specific amount, usually about R2 000. Your insurance company will be able to advise you on this.

Buildings
If you have a bond this is compulsory. However, you do not have to use the insurance company specified by the home loan finance institution if you feel it is overpriced. You are entitled to shop around for a better deal.

Insurance via a broker
Obtaining your insurance through an insurance broker has traditionally been the way to obtain cover for your possessions, and many people prefer to do business this way.

"There is definitely room for both brokers and dealing directly with an insurance company," maintains independent financial services consultant Yusuf Wajah. "It is a matter of choice.

Each option has benefits and also risks, although Financial Advisory and Intermediary Services (FAIS) legislation has been introduced recently to regulate the insurance industry and offer the consumer more protection."

"A broker gives you the opportunity to discuss things face to face rather than with a voice on the telephone. When you consult a broker, they should first do a needs analysis with you.

This analyses your lifestyle, income and possessions to determine the most appropriate insurance for you. It will also include your risk profile, for instance your age, the area you live in, your existing security system, and so on. The lower the risk you represent, the lower your premiums will be."

"A broker will be able to explain all the conditions attached to your insurance policy, such as exclusions and the excess you’ll be liable for if you claim. If you have queries it’s reassuring to have the continuity of a personal relationship, whereas if you are dealing with a call centre you might not get to speak to the same person who took your initial call."

The benefits of using a broker often only become apparent in a crisis, for instance in the event of a complicated claim, they could negotiate with the insurance company on your behalf. "An independent broker will have access to all the insurance companies, to recommend the best one for you.'

DIY Insurance
Over the last few years, there has been a move towards dealing with insurance companies directly. Many companies now offer a service where you can arrange insurance by telephone or on the Internet.

"The value is that it is quick and easy to do, and that it eliminates the cost of a middle man or broker," explains Anthea Abrahams, director of Dial Direct Insurance.

The consultants in the call centre should explain every aspect of the policy to you. You are taken through the process step by step. This includes doing a needs analysis and drawing up a risk profile. Claims are also handled over the telephone, which is convenient and may save time for the consumer.

The ultimate responsibility for knowing about your insurance remains yours, however. As soon as you receive your policy, you need to read the policy book and schedule of insurance.

It is essential that you understand what you have insured, what is excluded, and what your excess will be in the event of a  claim. You also need to check that your personal information and contact details are correct and up to date at all times.

Insurance for women
Because statistics show that men and women pose a very different risk when it comes to vehicle insurance, some companies now take this into account.

"We introduced lower car insurance premiums for women drivers when research proved conclusively that women have fewer accidents than men," says Robyn Farrell, director of 1st for Women Insurance Brokers. "This  translates into a considerable saving."

There is no difference in the risk profile between women and men for other insurance such as home contents, but if you use the same company for all your insurance requirements, the lower car premium will impact positively on your overall premium.

Many companies now also offer added value in the form of 'assist' programmes, such as roadside, medical and trauma assistance and a free towing service. Others offer plumbing and electrical assistance. It is in your interest to find out about these extras when investigating different insurance options.

It is also essential that you  alert your insurance company to any dissatisfactory service you may have received. The feedback is necessary to ensure improved service in the industry as a whole. Insurance is not only about the  premiums, the service levels are also important.

Take responsibility