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Insurance relief: Downgrade or pause cover?

Reassess your exposure to risk

Many insurers offered premium relief for three months from April to June, but if you are still not earning or earning in full, you can still ask for premium relief.

A few cars can be seen on the N1 in Johannesburg as lockdown regulations ease. / ANTONIO MUCHAVE
A few cars can be seen on the N1 in Johannesburg as lockdown regulations ease. / ANTONIO MUCHAVE

The blanket relief measures that insurers implemented to help their policyholders through the financial crisis that came with the lockdown expired at the end of June.

However, there is nothing stopping you from applying for relief on an individual basis if your employment or finances remain affected by the lockdown.

Most short-term insurers are encouraging you as a policyholder to downgrade your cover to realise reduced premiums in the next few months. 

Outsurance chief executive Danie Matthee says while the Covid-19 lockdown rules have been relaxed slightly, many Outsurance clients are still driving less than usual. 

If you are one of them, the insurer is offering you a 10% discount on your June premiums.

“With the relaxation of the lockdown and more businesses opening, a new normal is setting in. We are seeing this with more vehicles on the roads and an increase in claims compared to the past two months.  

“We will keep monitoring the volumes but do not have any further relief measures planned at this stage,” he says. 

Matthee says you have the option to downgrade your cover if you are making limited use of your car. 

“The situation is constantly changing, and we will continue to review how we can help. We encourage our clients to keep an eye on their mobile phones and email inboxes for updates,” he adds.

Philippa Wild, head of commercial underwriting at Santam, says the insurer has reduced its renewal increases for the foreseeable future. 

“Initially we were only able to assist clients where debit orders bounced, as this confirmed that the client had financial difficulties. As the process evolved, we were able to adapt and also able to assist certain clients prior to their debit order bouncing. We are still in the process of rolling out more than R400m in Covid-19 relief to clients. 

Wild says many policyholders, with the support of their brokers, have used the time to restructure their insurance and realise premium savings.

King Price has introduced a new policy for the lockdown allowing you to change your comprehensive car insurance cover to third party, fire and theft cover, with limited accident cover for essential driving. 

“This worked out 60-70% cheaper for our clients and we saw about 9,000 clients taking up the product. As people are driving more and the accident risk is already back up to more than 70% of what it was pre-lockdown, we’re busy ensuring that all clients remain covered by either migrating them back on to their comprehensive cover, or on to Chilli, our new ‘pay per k’ cover option,” Gideon Galloway, chief executive of King Price, says. 

Galloway says King Price introduced its Chilli policy to cater for the fact that many South Africans will not be going back to their “normal” commute any time soon. 

“While people are driving less and should be able to save on their premiums, we also realise that simply discounting premiums is not a sustainable solution,” he says. 

King Price saw the number of kilometres its policyholders were driving reduce by around 75% during the first weeks of lockdown. As the lockdown restrictions eased, the reduction has shifted to about 45% of normal mileage, Galloway says.

“Recent stats also show that car theft incidents – which dropped dramatically when lockdown was first implemented – are back up to 60% of pre-lockdown figures,” he points out. 

Christelle Colman, managing director of Elite Risk Acceptances says the best way to reduce your premiums now while the lockdown continues is to reassess your exposure to risks and adjust your cover accordingly.

Colman says you can reduce your comprehensive cover temporarily to third party, fire and theft if you are not driving regularly.

Alternatively you can increase your excesses because you are less likely to claim, although it means if you do, you could face a large amount you have to pay out of your own pocket.

If you are still paying off your home or car, it is vital to keep them fully insured, but increasing your excess could give you some temporary relief, Coleman says.

Budget Insurance suggests you take some items off cover and add them back when things return to normal – but be aware of the risk of doing that.  

It also suggests you reduce or remove car hire from your car insurance policy.

Finally it suggests you ask your insurer if you are able to pause your cover.