For most of us, short-term insurance is a grudge purchase. It’s something you know your business needs but you make sure to shop around to get the best deal. Then you pay your monthly premium and forget about it until you need to make a claim. Which is invariably when you come to grief because you learn that your cover wasn’t what you thought it would be, or even worse, that you weren’t covered at all.
While it’s tempting to lay the blame for such unfortunate occurrences at the door of the insurance industry alone, the fact is that a certain amount of responsibility lies with the purchaser of short-term insurance. It is your responsibility to ensure that all the information you gave the insurer was correct, that it remains so over time, and that you have supporting documentation to prove it.
Make sure the contract is accurate
When you purchase short-term insurance, your insurer should automatically provide you with a copy of the proposal form. In spite of what its name might suggest, this is permanent, not temporary, and it is your responsibility to ensure that all the information on it is correct. If any of it is wrong, the contract may be void. And paying insurance premiums once a month does not a contract make – you can pay your premiums but if you haven’t checked the information on the contract is 100% correct, the insurer may not be liable to pay when you claim.
Denis Beckitt, writing for the South African Insurance Association (SAIA), advises, “A general, overall, great big tip is to keep your proposal documents! Check out once a year whether anything fundamental has changed. If, over years, a feature of your proposal information has changed the insurer may reject your claim.” Once you get a copy of the policy document, check that the information is correct and be sure to read all the exclusions. That way you are less likely to get nasty surprises when it comes to claiming.
Retain proof of purchase wherever possible
Most people buy insurance policies over the telephone, which makes it difficult for the insurer to verify that the item you are insuring (printer, computer, desk) is worth the amount you say it is. Very often they will ask you for a serial number (where relevant) when providing you with a quote, but it’s a good idea to retain proof of purchase for all the items you insure. Keep these receipts together in a safe place along with your policy document. They may be required when you submit a claim.
Review your value
Bear in mind that the amount you insure something for may not necessarily be the amount you are paid out. Rather, you will be paid the replacement value. So if you insure your laptop in 2009 for R15 000 and then claim on it in 2012, the insurance company may pay you what your laptop is worth in 2012, which will be considerably less than what it cost you.
For this reason, it’s vital that you review the value of your insured items on a regular basis. If you fail to do this, you will simply end up paying a higher premium than you need to and wasting money. When the value of your company’s computers, vehicles or machinery depreciates each year, you need to inform your insurance company so that they can adjust your premium accordingly. This is your responsibility – they won’t do it for you.
