Let’s be honest, shopping for insurance is about as fun as, well, *shopping for insurance*. But, because life loves to throw curveballs, it’s 1 of those aspects of ‘adulting’ you can’t avoid.
Whether it’s car insurance you’re after, or cover for your buildings and everything in them, it’s crucial to know what you’re getting into before you say a-okay. Ain’t nobody wants to find out they’ve been paying a lower premium for cover that’s going to leave them high and dry when something goes wrong.
South Africans are doing the insurance shuffle
With more and more South Africans feeling the pinch from the ever-rising cost of living, many are re-looking their insurance options. In fact, a recent survey by insights company TransUnion revealed that 59% of respondents looked into their car insurance options between February and August 2024, and the other 41% planned to do so in the 6 months starting in September. Of these respondents, 41% are looking for cheaper premiums and 31% want better cover.
The reality is, inflation is making everything from your morning coffee to car payments more expensive, and many are hunting for ways to lower their monthly costs. Some are also reconsidering their buildings insurance to see if there’s room to save. And that’s not necessarily a bad thing. The trick is not leap before you look. Rather, do a deep-dive into the fine print first.
The hidden costs of ‘cheap’ insurance
Cheaper isn’t always better… And often, it comes with a catch. In the context of insurance, this ‘catch’ can mean balls will be dropped either after trying to claim on reduced cover, or in the form of hidden additional costs like having to pay higher excess amounts, install a tracking device on your car, or upgrade your home security.
So, when comparing quotes, always make sure you’re comparing apples with apples. (Or Audis with Audis, and apartments with apartments.)
The fine print… And your contractual requirements
Here’s something to chew on: If your car is still financed, or your house is bonded, you’re required by the financing institution or bonding bank to have comprehensive insurance for these assets. The reason for this is that they aren’t *your* assets until you’ve paid back every last cent that you borrowed.
Comprehensive insurance gives the banks and financers surety that their loans will be paid back in the case of total loss. This is why it’s critical to insure your home for its full replacement value, which includes rebuilding it from the foundation up, if necessary.
Examples of ‘total loss’ include cars being written off or stolen and not recovered, and houses burning to the ground or being washed away on floods. In such cases, your insurer will first pay the outstanding loan amount to your creditor, including and excluding some costs, before paying anything that’s left out to you.
This in turn ensures that if something happens, you’re not stuck paying off a loan for something you no longer have. Cancelling or downgrading your comprehensive insurance could leave you liable for repayments *and* the cost of replacing the asset.
Take a long-term view
Ask yourself this question: If my car was written off today, or my home was razed by flames, could I afford to replace it out of my own pocket? If the answer is ‘no’ then keeping your comprehensive cover in place is the smartest thing you could do, even if your car and home are fully paid off.
This way, if disaster strikes, you won’t be left facing huge personal costs to put things right. You can just leave it up to your insurer… Provided of course that you’ve stuck to your end of the bargain and fulfilled your responsibilities and obligations (like always paying your premium in full and on time). After all, the goal is to be in the same financial position after an incident as you were before it.
While shopping around for insurance is smart, don’t get tunnel vision if you’re quoted a cheaper premium. Take a close look at what’s actually being offered, and make sure you’re not sacrificing crucial cover for a slightly smaller monthly payment.
Click here or WhatsApp us on 0860 50 50 50 for a commitment-free insurance quote.
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Psst… This blog provides general info only, and doesn’t count as financial or product advice from King Price or our legal and compliance experts. Remember, all our premiums are risk-profile-dependent, and T’s and C’s apply. Our most up-to-date KPPD (policy wording) can always be found here.
Our website T’s and C’s can be found here.
