It feels good to know you’re protected by insurance, but you don’t want to pay too much for it, right? Tim Grafton of the Insurance Council of New Zealand has some tips.
Insurance is an important part of your lifetime financial plan. It protects you financially from risks to your home, house contents, car, boat and business.
It can also help out with medical costs and travel crises, or support your family if you die.
But everyday life can be expensive, and there are a thousand things competing for every dollar we earn.
So, here are some ways to keep your insurance premiums down while keeping the cover you need.
1. Increase your excess
The most direct impact you can have on your premiums is by upping your ‘excess’, which is the proportion of any insurance claim you’ll need to pay yourself before your insurance kicks in.
By increasing it, you’re taking on more of the risk yourself and your insurer is taking on less. But don’t set your excess too high. The higher it is, the more you’ll need to pay upfront if you claim.
2. Turn down your add-ons
Lots of insurers sell optional add-ons to their policies, such as glass cover. Each of these add-ons increases the amount you pay in premiums.
Regularly assess which add-ons you have and see if you still need them. If you don’t, removing them could decrease your total premium.
3. Ask for discounts
Many insurers offer a range of discounts for things like good claims histories, having a professionally-installed or monitored burglar alarm in your house, or having several policies with the same insurer.
See if you can get a discount for having after-market immobilisers installed in your car, lock it in a garage at night, or only drive it on weekends.
If you’re moving all your policies to one insurer to get a multi-policy discount, make you know the differences in cover and excesses between your new and old policies, and be certain those changes work for you.
4. Pay once a year
Many insurers let customers pay premiums weekly, fortnightly or monthly because it’s easier to afford them, but if you can afford to pay once a year in a lump sum, it can be cheaper. This is because multiple payments increase admin costs for insurers.
If you can come up with the cash, ask your insurer if it’d be cheaper to pay once a year.
5. Shop around
This one may seem obvious, but every insurer offers different policies with different benefits, exclusions and costs. Do the research before you buy insurance and don’t just sign up for the first policy you look at. It may not be the best suited to your needs – or the cheapest.
Make sure the policy you buy covers you for the things you need, when you need them. If you find several that do the job, then compare their costs but, first and foremost, make sure you’re getting the cover you need.
6. Name your car’s drivers and make sure they’re all over 25
Statistics show that young drivers are more likely to be involved in accidents than other people. And some age-groups or genders are less likely to have accidents.
By naming the people who’ll be driving your car and excluding under-25s, you’re reducing the risk your insurer takes on, which can lead to lower premiums. If you do name drivers, it’s important to only let those people drive your car. If someone who’s unnamed or under-25 drives it and crashes, your insurance likely won’t cover you.
7. Reduce the value of older vehicles
If you have a vehicle with a low value, such as an old car, or a late-model car in poor condition, you could reduce your cover to third-party. Third-party insurance covers the damage your car could do to someone else’s vehicle or property.
Reducing your cover will drop your premiums, but it also means you’re not covered for any damage you do to your own car if you crash. If you’re looking at this option, be prepared to pay for this yourself.
Fire and theft insurance can be included with third-party insurance, to cover your car if it’s damaged in a fire or stolen.
8. Be mindful of your claims history
All insurers consider your claims history when they’re pricing policies. If you haven’t made any claims in the past few years, your insurer may offer you a discount. Don’t let this stop you making a claim if you need to, however. Your policy is there for when something goes wrong.
No matter what you do, it’s important that the policy you have meets your needs and that you know what you are (and aren’t) entitled to claim.
If you have questions, speak to your insurer.
First published 6 August, 2018
Story by Tim Grafton, Insurance Council of New Zealand
JUNO does not contain financial advice as defined by the Financial Advisers Act 2008. Consult a suitably qualified financial adviser before making investment decisions. This story reflects the views of the contributor only. Content comes from sources that JUNO considers accurate, but we do not guarantee that the content is accurate.