Kickstart your year with these vital insurance checks

A new year, a new you? Or maybe not. Unfortunately, New Year's resolutions tend to be doomed from the start, with a 2024 Forbes study citing that the average New Year's resolution lasts only 3.74 months.

While many of us tend to make wellness-related commitments at the start of each year, goals related to the health of our finances, particularly insurance, are equally important and may even be easier to achieve than giving up chocolate for a year.

Your contract with your short-term insurance company is automatically renewed every year. But a lot can happen in a year. Despite this, people tend to simply allow their contract to ‘tick over’ without scrutinising it to check they’re still adequately covered.

As life changes, so do your insurance needs

Resolving to check your insurance policy at the start of each year will ensure you maintain the right amount of cover and could even help you save some money in the long run. An annual review of your policy means you can keep your policy details up to date and make sure your coverage is aligned with your current situation, preventing both under-insurance and over-insurance.

This proactive step will protect your assets and may reveal opportunities to optimise your premiums. It’s a financial health check that everyone should prioritise. January is a good time to dust off that insurance policy, give it a thorough read, and do the following checks.

Keep your wheels protected

Your car should be insured at a ‘reasonable market value’, or in other words, the retail value that a dealer would sell it for. This usually includes the age, the mileage, the condition of the car, and any extras. Unfortunately, cars tend to be a rapidly depreciating asset, but this can have an upside for your insurance premiums. Your vehicle’s market value changes through depreciation, so the insured amount on your policy may no longer reflect its current value, and you could stand to save on premiums as your car ages.

When you do your car insurance check-in, you should also review your cover options. For example, if you bought third-party or limited cover, it may be time to consider taking out comprehensive cover for optimal peace of mind on the road.

Leading insurers will usually have the same wide range of options for protecting your car as they do for home cover. For example, you can choose the amount of cover you would like for credit shortfall (with or without residual), vehicle hire, and accidental damage to tyres or rims.

Check the amount your home is insured for

If you’ve enhanced the value of your home by adding solar panels, replacing your roof, or redoing your kitchen, you need to increase the amount your house is insured for. Your house (the actual structure) and your belongings (the contents of your home) must be insured at their replacement value. This is the cost you will incur, at the time of a claim, to replace the building (your home) or belongings with similar, new structures or items. And it is usually more than we tend to think.

Do a home contents recon

The main reason for reviewing your policy is to make sure that you are insured for the right amount – this is what insurers call the ‘sum insured’ or ‘limit of indemnity’. Over the past year, you may have acquired a few more assets or valuable items, like a new bicycle or laptop, or even updated your home security. If you have, then it’s the ideal time to adjust the contents of your home insurance cover or take out adequate home contents insurance in addition to your building insurance, and note the security enhancements accordingly.

An important point to remember is that in most cases, your building insurance will cover any structural damage or destruction from events such as fires, extreme weather events, and burst geysers. Home contents insurance offers an additional level of cover for the items within the home, including electrical appliances, furniture, and other valuables.

Your insurer should offer you the flexibility you need to get home contents insurance at a price that suits your budget. For example, with a Santam policy, you can choose a product offering based on your needs, to cover everything from washing on the line, cash kept on the premises, and the personal belongings of your domestic workers or guests.

By reviewing what you’re covered for as part of your annual financial wellbeing regime, you can make sure that you have the cover you need as your lifestyle and circumstances change.

* Kemp is the head of personal underwriting at Santam.

PERSONAL FINANCE