Do Not Let Economic Pressure Sacrifice Insurance

For many years South Africans have enjoyed what can only be described as a 'rosy' economic environment. However, it looks as though the winds of change have arrived and it is time for us all to tighten our belts.

In just the last few months interest rates have jumped by a massive one and a half percent and are expected to rise even more, the fuel price has continued its upwards journey and inflation has ballooned the price of a multitude of products and services around us.

What this means is that the average household income simply does not go as far as it used to, with higher bond rates, larger car payments, bigger food costs, increases travel costs and so forth.

As a result it has become necessary for the average South African household to look for ways to reduce everyday and monthly expenses and spending. Unfortunately, sometimes people think that the one area where they can save is by cutting back on their insurance.

Let's face it, to 99.9 percent of people monthly insurance premiums are nothing but a 'grudge purchase', or an 'inconvenience' with 'nothing to show for it'. However, this is where most people are wrong. What they have to show for their insurance payments is 'peace of mind'.

Peace of mind that their house is completely covered in the case of water or fire damage, or that their cars are comprehensively insured in the event of accidents, theft or loss, and so forth.

Too often people are tempted not only to reduce the amount of their monthly insurance premiums, but in some case cancel them outright. Imagine how you would feel if your car was stolen or involved in an accident and you were underinsured or not insured at all.

Instead of worrying about your monthly insurance premium of a few hundred or thousand Rand, you would now have to worry about where to come up with, in some cases, hundreds of thousands of Rands to replace your car or household goods out of your own pocket!

A financial blow such as this can and does have long-reaching financial and ultimately social effects. In addition, with the economic situation worsening in South Africa, crime is on the increase which means your car, household goods are even more at risk than before and must be comprehensively insured as a result.

In fact, insurance policies covering household contents and car accessories should ideally be updated annually to take into account depreciation and to ensure that they are insured to their current market replacement values.