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Results from short term insurance companies have been disappointing, to say the least. Unfortunately this is going to lead to substantial premium increases.
The effect of inflation is not only dominating conversation, but is causing many to think about ways of reducing their monthly expenditure.
Personal insurance is no exception. It has always been a grudge purchase, and while it makes sense to be adequately insured, many are cancelling policies to make ends meet.
Every day presents different challenges and risks. Personal insurance needs to be flexible to satisfy your individual needs. The last thing you want is to pay insurance for years and when you make a claim to either be told there is no claim or that you are under-insured.
Insurance costs in South Africa have been increasing between 6 percent to 8 percent yearly for the last few years. Given the recent dramatic change in economic conditions at home and abroad, there are predictions that 2009 will see an average increase in the cost of personal insurance in South Africa of 15 percent to 25 percent.
The solution is for policy holders to take on more voluntary excesses and to reduce the less important part of your policy.
It is possible to reduce premiums, but ensure that you are covered for any major catastrophe.
Increases in interest rates, inflation, the petrol price and the price of gold, means it will cost you more to replace your belongings following a loss than it would have cost you a year ago.
How you protect your home as well as contents and valuables should not be seen as a quick-to-do event.
You should ensure that the values insured are sufficient for you to be put back into the same or similar position as before you had the claim.
It's a lot easier when you get a renewal for a yearly policy, but it's those who sometimes pay monthly premiums who tend to forget to re-assess their values adequately and frequently.
If you insure properly and you understand what you are insured for and what you are not insured for, you should never be the individual who says "all I do is pay, pay and pay for insurance and when I have a claim there's always a problem".
Policyholders should understand the following:
l The effect any claim will have on your no-claims bonus.
l Insurance on the property and whether you insure through the bondholder or privately.
l If you are buying direct make sure that you inform the insurers of all information.
l Should you combine motor and your domestic/luxury cover onto one policy.
Keep a full inventory of everything in your home - this will save a lot of hassle should you have a claim.
Don't be one of those who turn round and say "if only I had . . . "
l The writer is a director of Pioneer Financial Planning. Visit www.pioneer.co.za or e-mail email@example.com