When it comes to short-term insurance policies - cars and household contents - if you’ve had a few claims recently, especially big ones, best you shop around for another insurer, suggests consumer journalist Wendy Knowler.
Your premiums and excess will be higher, but it beats being offloaded by your insurer because of what they call an “unfavourable loss ratio” (i.e. being dumped because you’re costing them too much considering your premiums; they consider you too high-risk).
It’s usually catastrophic if that happens, warns Knowler, because you must declare it to other insurers, meaning you’ll find it hard to get alternative cover.
If you do, it will be hellishly expensive.
It’s a huge problem being dumped by your insurer if you still owe money on your vehicle because credit providers always require financed vehicles to be comprehensively insured.
A case in point
Knowler recently heard from a woman (Carol) whose family got ditched by her insurer, despite her pleas to rather increase her excess.
The loss-ratio spreadsheet indicated:
The family insured four cars and made eight claims totalling R140 000 between June 2016 and June 2019.
R36 000 of the total was for car hire while repairs were ongoing.
In one case, the rental car was a Mercedes Benz (10 days at R21 000, making up a third of the total claim – “totally excessive”).
Now no other company will insure us. We tried multiple ones via a top broker.
Carol also claims to have contacted all the repair shops involved to investigate what the insurer paid them.
She claims to have found that the insurer had reflected higher amounts on the spreadsheet, in some cases.
In the end, the insurer decided not to off-load the family but warned that their premiums are going up considerably.
Carol has since removed the car hire benefit from the policy.
We have a spare vehicle, so this is not necessary - doing without that ‘perk’ will off-set the premium rise and reduce our cost to the insurer per car claim.
Install an alarm in your home without your insurer having to ask you.
Maintain your insured buildings to avoid unnecessary claims in future.
Install a tracking device in your vehicle
Avoid parking in high-risk areas.
Ask your insurer how close you are to being off-loaded.
Don’t make small claims but inform your insurer of the incident so you can’t be accused of non-disclosure next time disaster strikes.
Seek alternative insurance before you are cancelled by your current insurer.