How to buy short-term insurance (10 important notes)

1. You get what you pay for: Cover differs, and so does premiums.  So not all policies are the same.  If you can place restrictions on how your policies work or reduce your cover on certain items, you can reduce the cost of claims.  Never assume cheap insurance is a good bargain; cover you thought was ”standard” might be removed and will make your claim very expensive.


2. Make sure you know what you are covered for: Always read your policy carefully.  Especially the part where it lists your “exclusions and restrictions”.  Always ask about something you read which you do not fully understand.  Your broker will explain everything to you.


3. Cover only what is CRUCIAL: Ask yourself; what is important to me?  Is it your car?  Is it the new necklace you bought your girlfriend? Or did you buy your boyfriend a new watch?  Sometimes items may be so valuable they will end up not being fully covered, but only increase your monthly premiums.  Cover what you really need covered, protect the rest in a safe or vault if possible.


4. Stay up to date with your policy: Your risk profile can change, meaning your premiums should go down, or up.  Remember to tell your broker about the new alarm system you installed or the added electric fencing around your home.  The same goes for changing homes from a high risk high-crime area to a more secured complex.  Improving your security will lower premiums significantly.


5. Get a Professional: Getting a pro to do your claims and handle administrative duties effectively will save you time and effort.  He/she will be able to advise you objectively and take responsibility for these matters.


Ensure your home at the correct value


6. Be honest: Keep your premiums affordable by not claiming fraudulently.  These insurance companies have set up internal investigative measures to determine whether or not your claim is legitimate.  Stowing away your newly bought flat screen television at your cousin’s house, and claiming for a new one, will cause you and your family some serious trouble, even jail time.


7. Manage risk yourself: If you are careless, it is going to cost you.  Install security gates, keep doors locked, don’t leave stuff lying around.  Your claim history will reflect your premiums.  Manage your risks to cut your premiums.


8. Don’t OVER-insure: Almost everything depreciates in value.  Your car for instance, will have a lower resale value this year, than it had the year before, meaning your premiums should go down a bit.  Update your insurance regularly to ensure that your monthly premiums accurately reflect your covered items’ value.


9. Don’t UNDER-insure either: The result?  You will carry most of the replacement costs of a given item.  If you have done some home improvements, tell your broker, he should update your cover.  When value goes up and you don’t advise your broker, your premiums won’t keep pace in the event of a claim.


10. Choose the right broker: Rather deal with an established broker with good qualifications and experience.  You will have claims settled in no time without any hassle.  Search our site for the article explaining how to choose the perfect financial advisor/broker.

Author: Shaun De Kock

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