Generally speaking, car and home insurance is a financial protective service that you get specifically for your valuables and property. This way, if incidents happen, like theft or accidents that cause damages or loss, you won’t have to pay out of your own pocket to repair or replace anything.
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These costs can run into the hundreds of thousands, which very few can afford to simply cough up as and when it’s needed. Yet, although an insurance policy will pay on your behalf and save you from financial ruin, it’s still considered a grudge purchase.
Perhaps what makes car and home insurance sting is paying a super high premium or having your claim rejected after faithfully paying your premiums every month. To that end, we’ve jotted down the most expensive mistakes that can result in you not being covered properly, your claim being rejected, or super high premiums.
Underestimating Your Needs
Whether it’s car or home insurance, if you underestimate the level of cover that you need, you’ll find yourself in a world of disappointment if you ever put in a claim.
This is because you’ll be underinsured.
To put it simply, underinsurance is when you don’t have enough car and home insurance to cover the replacement value of the items you’re insuring. For example, if you insure your R500,000 house for R300,000 and there’s a fire, you won’t be paid out enough for the repairs. Similarly, if you opt for third party car insurance instead of comprehensive and are involved in an accident, then damage to your own car won’t be covered. That’ll have to come out of your own pocket.
Sometimes, insufficient cover comes from not knowing what you need, but most of the time the decision to get ‘less cover’ is because people want to save money. But this decision, intentional or not, results in you failing to recover the total amount of your losses.
Essentially, this mistake will land you with serious financial hardship. That’s why it’s so important to assess your needs and talk to your insurance company about the value of your property and the level of cover that you realistically need.
Buying Into The Extras
Some insurers include benefits with certain policies as part of the contract, like roadside assistance bundled into a car insurance policy.
However, if that’s not the case and there are extras that you can choose to include with your policy, then we advise you to research the different options carefully. Sometimes these extras sound like a good idea, but are simply adding to your fees. Other times, they flesh out your cover in reasonable ways to accommodate common risks that could cost you money.
For example, adding cover for your tyres to your car insurance policy so that the rims and wheels are covered if you hit a pothole the size of a swimming pool. The cost of dealing with your tyres may be less or just about the same as your car insurance excess and therefore not worth it, leaving you to handle the bill on your own. However, the excess for this extra would be lower and therefore save you money by allowing you to claim for a new tyre or rim (or both).
NOT Regularly Reviewing Your Policies
Your car and home insurance needs will change over time, that’s just a fact. The best way to keep up with these changes is to stay updated with your policy documents – and it’s a mistake not to do so.
Here are some ways that this mistake can cost you:
- Increasing the value of your insured item, like renovating your home, and not telling your insurer means that you’ll be underinsured, leaving you vulnerable to a low payout if something terrible happens.
- Changes in your life (like moving house, getting married, or having a child) could require changes to your policy, and if you don’t update your insurer, you could be left underinsured, have your claim rejected altogether, or leave you paying an unnecessarily high premium.
- Not reviewing your policies means that you could miss out on discounts and potential savings.
Ultimately, you absolutely need to regularly review your policy by assessing your current needs and determining whether it meets them. If it doesn’t, you need to make a bigger change, like switching insurers.
Feel informed?
Car and Home Insurance is a valuable way to manage risk and protect your financial wellbeing, but there are a few common mistakes that could result in unexpected out-of-pocket expenses, denied claims, increased premiums, and even damage to your credit score.
The best thing to do is talk to your insurer, however if you’re struggling to communicate, this might be your sign to switch to an insurer with a reputation for transparency and streamlined communication protocols. In fact, the AA’s Insurance Supermarket can help you find multiple car and home insurance quotes from reputable insurers.
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