The process of taking out an insurance policy usually involves contacting an insurer for a quote, signing a contract, and paying monthly premiums. Your contract and premiums are usually tailored to your risk profile, which takes into account demographic and personal information such as your age, experience, previous claims or incidents, and information regarding your asset. When you do file a claim, you will have to contact your insurer with the relevant information and documents on hand.
Your insurer will then arrange for replacements or repairs, however, you will first be asked to make an excess payment. This excess payment amount can also depend on your risk profile; it is the uninsured portion of your loss that you are liable to pay for before your insurer pays out. Having an excess amount can give you a sense of responsibility and deter you from claims for small accidents and damages.
Depending on your risk profile and insurance policy, you may have to pay a specific type of excess. Be sure to check the terms and conditions of your excess payment as this may give you some insight as to what may drive the excess amount up or lower your payment. For example, if you are under 25 and take out car insurance you may be subject to a larger excess amount because you are perceived as a higher risk individual.
All insurance policies have a compulsory excess amount that is stipulated in your insurance contract. Additionally, you can voluntarily increase this amount and pay a higher overall excess.
Your excess payment can affect your monthly premiums; if you agree to pay a higher excess amount your monthly premiums can be lowered. Similarly, if you agree to pay only the minimum compulsory excess amount in the event of a claim, your monthly premiums will increase. Both options have their pros and cons; whether you should pay voluntary excess or not depends on your financial situation, goals, and the likelihood of needing to make a claim.
It’s easy to save some money every month by increasing your excess amount, however, you should be prepared to pay the excess amount in full in the event of a claim. Conversely, paying a high monthly premium can afford you some leeway during an emergency as you won’t have to pay a large excess to make a claim.
Besides a compulsory and voluntary excess, you may be subject to a special excess or age and experience related excess. These types of excesses are dependent on your insurance policy, and demographic information.
One simple way to lower your excess is to increase your monthly premiums, however, everyone may not be in the financial position to do this and it may require some additional budgeting.
Another way to lower your excess is to improve your risk profile. You can achieve this by maintaining your assets so that they do not need to be repaired or replaced as often. Depending on the asset, you can try to practice better habits such as driving within the speed limit and, avoiding dangerous high-crime zones.
Some excess amounts can’t be avoided though, such as age and experience related excess payments. If you are under the age of 25 or don’t have much experience driving, you may not be able to avoid a high excess. Luckily, this can be resolved in a few years by displaying good, safe behaviour and limiting claims. Another factor that increases your excess amount is the number of claims you make. If you make many claims in one year, you may find your excess amount increasing as you are now a greater actuarial risk for your insurer.
If you’re paying premiums every month and still have to pay a hefty excess to claim; you may be wondering if having insurance is even worth it. The short answer is: yes! Your insurance policy serves as a financial cushion during accidents and emergencies. The amount you pay in excess will usually be less than the amount your insurance company will contribute towards your claim. To get a better idea of how this works, let’s consider a real-life example.
Suppose your geyser suddenly bursts and needs to be replaced. If you don’t have home insurance, the cost of a new geyser and installation can be upwards of R7 500. This money will have to be paid upfront, which can mean dipping into your hard-earned savings or borrowing money from family or friends.
However, if you do have home insurance, all you have to do is contact your insurer and pay your excess. Your excess amount may be stipulated in your contract or your insurer may inform you of the amount when you file a claim. For example, if your geyser costs R7 500 and you have a R500 excess, your insurer will contribute R7000 towards the cost of replacing and installing a new geyser. You will only be liable for a payment of R500; you will not have to spend time shopping around for quotes or finding an experienced plumber.
Whilst paying an excess can seem unnecessary, it does save you a significant amount of time, effort, and money. Your excess amount is usually determined at the onset of your insurance policy and can fluctuate depending on your claim history and risk profile.
If you are concerned about the excess on your insurance policy, you can speak to your broker about how your excess is calculated. Additionally, it’s important to compare excess payments, terms and conditions when deciding on an insurer.
It's important to have an excess amount that is easily payable, as some insurers may refuse to pay out or deduct the excess amount from your final payout. This results in you losing out on benefiting from your insurance services whilst still paying premiums.
Life is full of nasty surprises and while we can’t prevent them, we can prepare for them. Having insurance for your assets is a smart way to create a financial cushion and protect yourself from major loss and debt in the future. Luckily, BudgetGist is here to keep you in the loop! We are South Africa’s information hub for all things related to finance and money.
In the current day and age, having a laptop can be a necessity for many South Africans. Whether you’re a student, working from home, or just use your laptop to surf the web and watch movies, your laptop is a valuable device.
Depending on your laptop’s brand, model, and specs your laptop can also be an expensive asset that will be difficult to repair or replace in a hurry. After all, disaster can strike in the blink of an eye: water or fire damage, theft, nasty falls, or a hardware malfunction. It only makes sense then to want to create a financial cushion in the event that something unfortunate does happen to your device. This is where laptop insurance can help you!
Laptop or device insurance will generally cover theft, damage, hardware, electrical or component malfunctions. The extent of your cover can depend on your insurance policy, as some policies may offer comprehensive cover while others only cover certain types of damage.
Additionally, some insurers may require you to provide information about the types of risks you are most likely to be exposed to and tailor your policy around your needs. For example, if you regularly work in co-working spaces or public spaces you may be more susceptible to theft or water damage.
The issue of software malfunctions and computer viruses may or may not be covered by your insurer; if you feel you may be susceptible to these kinds of issues then you may want to speak to your insurance broker about your concerns. Alternatively, you can speak to someone who is more technologically savvy such as a professional in your school, university or workplace’s IT department about how to protect your device from viruses and cyberattacks.
While finding insurance for your laptop may not be as easy as finding insurance for bigger assets such as your house or car, there are a few reasonable options for South African consumers.
MTN offers device insurance for laptops, cell phones, smartwatches, and modems. It is relatively easy to get a quote online; you’ll be asked for some basic information such as your contact information, and device model. Take note that MTN only insures devices that are less than thirty days old, so be sure to insure your laptop as soon as possible. Seeing as premiums start from a mere R19, MTN insurance may be a good choice if you are already with the network or considering buying a laptop on contract.
Vodacom also offers insurance for your portable devices, including your laptop. Comprehensive cover starts from a relatively low premium of R20 a month. This covers accidental damage, theft and loss; your device will be replaced with a similar model or new device. Again, Vodacom only covers devices which were bought directly from them and have a Vodacom sim.
Whilst being relatively new to the market, the Johannesburg based short term insurance company offers something unique to South African consumers in the form of their entirely online process. From getting a quote, signing up, and submitting a claim, everything is done either through their website or app. Naked offers insurance for individual items such as laptops, instead of requiring consumers to purchase an umbrella personal valuables insurance policy.
Besides dedicated insurance policies for your laptop or tablet, there are portable possessions insurance policies that cover devices such as your laptop and cell phone. Portable Possessions insurance can fall under home contents or home valuables insurance. This is a good option to consider if you already have home contents insurance, or if you would like to insure other valuables such as your cell phone and jewellery.
Santam offers both comprehensive and limited cover options. However, the cover is restricted to what is stipulated in your home insurance policy. This means you will need to have an existing home insurance policy which will outline the risks under which you can claim for theft or damages on your laptop.
Ideally, you should be looking for value for money, an easy claims process, and a reasonable excess amount in your insurance policy. The value of your monthly premiums will fluctuate depending on the extent of your cover, the value of your laptop, and your insurer. However, your premiums should correlate with the value of your laptop, for example if your laptop is worth R8 000 you should expect to pay up to R100 in premiums.
One of the most important aspects to consider when choosing an insurance policy is the claims process. Most insurance companies will require you to contact them in the event of a claim, generally via telephone. Thereafter, you will likely have to pay an excess for the claim to be processed.
Investigating the claims process is important because you want to ensure that you receive the most out of your insurance policy. Whether this means paying the lowest possible excess, being able to contact your insurer after hours, or simply receiving assistance as soon as possible.
When deciding on an insurance policy for your laptop, it’s important to sit down and decide what’s important to you. For example, if you are a student or use your laptop as part of your job, you may need to get your laptop repaired or replaced more urgently than other people. Similarly, if you are a student you may not be in a financial position to afford high premiums.
So, ask yourself: how much are you willing to pay for laptop insurance? How quickly would you need your laptop to be replaced or repaired? What types of damages are you likely to experience? Each insurance policy has something unique to offer in terms of coverage, price, and benefits. The right insurance policy is the one that meets your needs without breaking the bank or compromising on service delivery.
Making a financial decision to compensate for life’s uncertainty can be tricky. Luckily, BudgetGist is here to keep you informed and help you make the right choices! We are South Africa’s information hub for all things related to finance and money
From fender benders on the road to kitchen fires and the airline losing your luggage. Life is full of nasty surprises! While there’s no way to prevent any of these unfortunate events from happening, there is a way to protect yourself from the financial repercussions.
Short term insurance is a type of insurance that protects you and your assets against potential disasters. As the name suggests, the cover is not indefinite, and you are not covered for all types of disasters. In exchange for paying monthly premiums, you can claim compensation from your insurers in the event of damage, illness, or theft. Besides financial compensation, your insurer may offer additional services such as helping you find skilled repairmen, roadside assistance, or providing emergency accommodation.
Short term insurance is an umbrella term for many types of insurance that protect your assets. Examples of short-term insurance include car insurance, medical aid, home insurance, and travel insurance.
The types of risks covered by short term insurance are potentially more regularly occurring, everyday hazards. Without the financial cushioning to combat these risks, you could find yourself depleting your savings or piling on debt.
For example, without home insurance, you would have to pay out of pocket if your geyser broke or your home suffered weather damage. The repairs and replacements could have you forking over thousands of rands, and you would have to spend hours finding skilled repairmen and sourcing parts from a reputable hardware store.
Short term insurance premiums can depend heavily on your risk profile, in other words how likely are you to file a claim? For example, car insurers would charge a higher premium to younger individuals because they have less experience with driving and are more likely to claim.
As you make claims, your insurer will begin to gather data about you and your premiums may increase or decrease accordingly. For example, if you are involved in multiple car accidents over a period of a few years, your car insurance company may deem you to be a high-risk individual and you may have to pay higher premiums compared to other people in your demographic.
The main difference between short term and long term insurance is the types of risks that they cover and how your premiums are calculated. Short term insurance takes into account day to day risks and mishaps such as thefts, fires, water damage, or illnesses. With short term insurance, your premiums can fluctuate depending on your risk, previous claims, and even inflation.
Long term insurance typically is meant to cover solitary events, and financial losses to you and your loved ones such as death, disability, and retirement. Examples of long term insurance include life cover, retirement annuities, and dread disease cover. With long term insurance, your risk profile is calculated by actuaries when you sign up for coverage. Actuarial scientists are able to produce highly accurate risk profiles, therefore your premiums are less likely to change over short periods of time.
With short term insurance, you can claim multiple times throughout your cover. For example, medical aid will cover a certain number of procedures, doctor's visits, and medical devices over the course of a year. In contrast, long term insurance only pays out at the end of the cover term. For example, in the case of life insurance, you will be required to pay premiums every month until you reach a certain age or your death. Your loved ones can then claim on your life insurance policy and receive your lump sum.
As we mentioned above, there are quite a few different types of insurance companies that offer short term insurance. Let's look at a few examples!
From road accidents and flat tyres to hijackings and smash and grabs, vehicle insurance can protect you from major financial losses, aid you through traumatic experiences and give you a sense of security while on the road. Companies such as MiWay and Budget Insurance offer comprehensive motor vehicle insurance which covers you in the event of accidents, theft, damage. These companies also offer roadside assistance and mechanic referrals.
Your home is likely your most expensive asset, so it only makes sense to invest in home insurance. When it comes to home insurance, there are three types of cover you can get: homeowner's or building insurance, home content insurance, and personal valuables insurance. Homeowner's insurance can be a requirement for taking out a home loan, and it covers a comprehensive list of damages mainly related to the structure.
Health is wealth! When it comes to short term medical-related insurance, you can take out a medical insurance plan or a medical aid plan. Medical insurance requires you to pay a premium every month, and you will require a lump sum in the event of illness or hospitalization. Medical aid also requires you to pay monthly premiums, however, you can make claims whenever you need to pay for doctor's visits, hospital stays, medication, and allied health professional appointments.
Running your own business can be really risky! Business insurance helps negate some of that risk by financially protecting you in the event of damages to your property or employees from natural disasters, theft, and unforeseen injuries. Business insurance can also help provide a financial cushion if you are involved in a lawsuit. Companies that offer business insurance include Old Mutual and 1st for women.
Travel insurance
When you’re on vacation, the last thing you want to worry about is dealing with lost luggage, delayed flights, or getting sick while abroad. Travel insurance protects you and your assets while in a foreign country, by offering comprehensive cover for theft, loss, damage, and illness. Companies that offer travel insurance include AIG, Hollard, and Old Mutual.
Making a financial decision to compensate for life’s uncertainty can be tricky. Luckily, BudgetGist is here to keep you informed and help you make the right choices! We are South Africa’s information hub for all things related to finance and money
Copyright © 2022 BudgetGist. All rights reserved
