Yearly Short Term Insurance Review

Insurance is called a “grunge” purchase. I wondered about the word and according to the dictionary it means: filth, dirt, or a style of music. Maybe the person who started calling it a “grunge” meant a “groan.” Be that as it may, no-one enjoys having to purchase insurance cover, but we are ever so glad we did when disaster strikes.

Whatever your feelings may be about short-term insurance, we all agree that we need it and because we don’t find it a pleasurable experience we want to get it over and done with, and not think about it until we have to claim. Well, unfortunately, for your own good, that is not the right way to look at short-term insurance. You need to keep your finger on the pulse.

Constant change is here to stay

If there is one saying that’s true, then it is this one. Not only do you change from year to year, your circumstances change. The whole world around you change; the economy change and this has a big impact on your short-term insurance needs. If the inflation rate goes up or down, it impacts on your short-term insurance, if the crime rate goes up or down it has an impact on your short-term insurance.

Personal changes such as buying your first car, buying another car, buying a cell phone, buying a house, buying furniture – all impact on the amount of insurance cover you should have. Getting married, having children, going on holiday, going on retirement – whatever change there may be in your life, it will affect your short-term insurance.

What happens to your car insurance year after year?

Every year you get a renewal notice, probably telling you that your insurance premium for the next year has increased by a certain percentage. There are many reasons why insurance companies may be justified in increasing their premiums, such as inflation, a major increase in car accidents or theft claims – all these things affect everyone’s insurance premiums.

So what can you do? Smile, and sigh, and accept it? There is something you can do that can actually bring about a reduction in your premium. Find out from a reputable car dealer what the current market value of your car is at present and ask your insurance company to adjust the value of your car, and your premium accordingly. Make an appointment in your diary to have this done once a year, you won’t be sorry.

What about my household content insurance?

While you are at it, do the same for your household content. With household content the rule is different to that of your car insurance! You may think that everything is one year older and this means that you can reduce the value as well. Unfortunately not. Household content is insured for the replacement value; let’s say there is break-in at your home and they take your television, sound-system and DVD-player. Maybe all those items were 5 years old already. The insurance company is not going to replace them with similar 5 year old items; you are going to get new ones! Therefore, you must be insured for what those items, and everything else in your house, will cost at today’s prices.

The yearly review

Remember we spoke earlier about changes in your life. Maybe you bought some new appliances during the year and you never thought of changing your insurance, maybe those items should be specified on your insurance. If you are not insured for the right replacement amount you will only be paid out pro-rata on any claim you may make, calculated according to the average clause.

The best is to ask a qualified insurance agent or broker to do a proper evaluation of your household contents as a once off. Then you can always just have a yearly discussion as to what changes took place and adjust your insurance accordingly.

Insurance companies automatically increase your contents cover every year

Your insurer will increase the total amount your household content is insured for according to the inflation rate. However, they do not know what changes took place in your life, you may even be over-insured and there is nothing to be gained by that.

So, make that date

To prevent any unpleasant surprises why don’t you arrange a review of your short-term insurance right now? Then diarize to repeat the exercise in a year’s time.