Smart Insurance: Finding the right balance between price and quality cover

Smart Insurance: Finding the right balance between price and quality cover

Jaco Erasmus – Director of Cornerstone Insurance Brokers

Since the inception of modern short-term insurance, it has been a grudge purchase. As an intangible product, it is often hard to justify paying for something each month that you may never use. “Cheap insurance” has been the tagline for countless advertising campaigns and everyone knows that guy who knows another guy that can slash your premiums in half.

On the other hand, many have fallen victim to expensive and “exclusive” insurance offers that promise world-class service and top of the range cover in exchange for a hefty premium, but fail to perform when the need arises.

Here’s the thing: cheap insurance doesn’t always equal bad insurance and expensive insurance doesn’t automatically mean good insurance – it’s all about finding the right balance between price and quality and figuring out what works best for your needs. However, in the short-term insurance industry, this is easier said than done.

To help you out, Cornerstone Insurance Brokers have summarised a few key areas that will help you find the right balance between price and quality cover.

Avoid underinsuring

Underinsuring assets is one of the biggest problems in the short-term industry and can lead to devastating effects – especially when claiming. Because so many consumers are only interested in getting the best monthly premium possible, this option is often offered but not fully explained and people end up signing up for inadequate insurance policies.

Underinsuring can also happen by accident because sometimes people are unaware of the value of their items or fail to update the value (updating values is especially important with items that increase in value over time).

Underinsuring means that instead of insuring your household contents for its replacement value e.g. R100 000.00, you insure it for R50 000.00 and pay less each month. The problem here is obvious – if you need to claim, underinsurance will apply and you will not be placed in the same position as you were before the loss. The financial implications are immense.

This is a great example of where the balance between quality insurance and affordable insurance was way off. Monthly premiums took preference over quality cover and that should never be the case. Instead of underinsuring your assets, look at the next point.

Actively manage risks and claims to reduce future premium increases

It is important to actively avoid costly accidents before they happen. Not only will this protect your belongings, but it will play a big part in reducing future premium increases, excesses, and other costs.

Actively managing your risk will allow you to get premium cover at better prices without compromising on quality cover. This could mean installing tracking devices in your vehicles, adding extra security to your property, or signing up for armed response.

Partner with a qualified and experienced broker

Appointing a qualified and experienced short-term insurance broker is by far the best way to ensure that you are getting the best value for money. With a short-term insurance specialist at your side, you don’t have to worry about tricky policy wordings, complicated schedules or quote comparisons – this means you won’t fall victim to costly insurance loopholes.

If you have any questions regarding your short-term insurance policy, regardless of the provider, remember to get in touch with Cornerstone Insurance Brokers. Call us on 011 794 6611 or email info@csib.co.za for more information.

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