Uninsured more vulnerable in tough economic times

In the face of this rise in the cost of living, cost-savvy consumers are always looking to reduce expenditure where they can.  Some may wonder how much of a necessity their short-term insurance policies really are, but the real question that must be posed is: 'can you afford NOT to be insured?'

In a world where consumers want instant gratification, the benefits of an insurance policy may go unappreciated. However, an unforeseen event causing damage to uninsured personal or commercial property, belongings or vehicles will leave the consumer more vulnerable, ultimately costing far more than a monthly premium.

Ensuring your assets are well-covered for any eventuality is part of good financial planning," says Attie Blaauw, head of personal lines underwriting at Santam.

Exposing your property to unknown risk by forgoing coverage is the last thing you should do in tough times.

Motor vehicle policies

It is estimated that 65 percent of the 10 million motorists on South African roads are uninsured, so whether a motorist is a safe driver or not, an accident caused by an uninsured driver means a high probability that you will have to pay for the damage to your car - irrespective of who is at fault. Imagine the cost implications if the vehicle is written off. This costs the driver in the short term (paying for the damages he didn't cause) but also in the long term (as the cost of industry premiums increase).

Uninsured motorists contribute to rising cost of insurance as they increase the potential risk factors for all road users. A driver who is insured helps to mitigate those threats, and can also take steps to further reduce their personal risk potential, which may help to curb rising insurance claims," says Blaauw.

Speak to your broker, advises Blaauw, not only to ensure your policy covers what you expect, but also to see if there are ways to decrease the monthly premium.

"remiums are partially dependent on the assessment of your risk factors so often simple tasks, such as the addition of a tracking device or alarm, can have long term benefits in decreasing the monthly premiums of a policy. Annual motor valuations, the number of kilometres the car is driven, and the driving history of the motorist also impact on a consumer\'s premium," says Blaauw.

Husehold contents

Damages to household contents can be caused by a variety of factors and vary in severity; from dropping a laptop to a catastrophic natural disaster. This underlines the necessary role insurance plays in protecting your assets against any perceived risks. In 2011 alone, Santam received 26 531 claims relating to house break-ins.

Although this number shows a slight reduction from the previous year, it should also highlight the possibility of losing your personal belongings due to theft.

Other than through robbery, personal assets are threatened by - and should also be protected from - many other hazards, such as water damage from a burst geyser, or a fire from an electrical fault.

"The onus is on the consumer to keep themselves, and their belongings, safe which may ultimately save themselves the cost of their excess and potentially keeping premiums lower," concludes Blaauw.