The start of the year is a great chance to reboot your personal finances – and that starts with a renegotiation of your insurance policies. Insurers are completely open to this, yet many consumers don’t know it’s an option.
“A consumer can renegotiate their short-term insurance policy as often as they deem it fit,” says Peter Nkhuna, Senior Assistant Ombudsman at the Ombudsman for Short-term Insurance (OSTI). This means that you’re not stuck forever with the premiums that you were offered when you first took out the policy.
It works both ways, Nkhuna says. “Most short-term insurance policies are monthly policies and may be amended from month to month,” he explains. “However, during the month, the consumer’s circumstances may change, affecting their risk profile. Consumers have an obligation to keep their insurers updated about such circumstances. This may in turn also lead to new negotiations.”
But just because you can renegotiate your policy every month, doesn’t mean you should. Bradley Du Chenne, CEO Hippo.co.za, recommends doing a review every six months or so, unless there has been a change in circumstances that will affect your cover or your risk profile. “For example, if there’s a change in where the insured property is kept, or how the insured motor vehicle is used, or if a different family member is now the regular driver of the car, you should inform your insurer immediately,” he says.
As for being locked into set premiums, Nkhuna points out that by law (specifically the Policyholder Protection Rules, or PPRs, of the Short-term Insurance Act), policy terms and conditions may only be changed after a notice period of 31 days. “However, most insurers allow an immediate change, should the consumer require it. This may also include a policy cancellation. Consumers would therefore be able to change insurers anytime.”
One obvious reason for a consumer to renegotiate an insurance policy is to try to get a better deal. “Take your car, for example,” says Du Chenne. “Its resale value would have decreased over the past 12 months, and so this should be factored into your premium calculation. You might also have moved into a different age rating which entitles you to a premium reduction, or you may have gone a year without a claim which entitles you to a larger no claims discount. You could save money by negotiating with your current insurer, or by using a comparison tool to see what other options are available.”
“Bear in mind that neither party is obligated to agree to the negotiations,” adds OSTI’s Nkhuna. “You or your insurer may simply refuse to do this if either party feels, for whatever reason, that agreeing to a renegotiated deal could be inopportune or not in their best interests.”
And if your current insurer does refuse to agree to a new deal, at least you’ll have a starting point for negotiations with someone new.
PERSONAL FINANCE