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With the cost of living at a high and the recent increase in the repo rate, owning a home in the current South African market may seem like a scary feat.
In fact, according to Stats SA the residential property price index (RPPI) increased by 0,2% month-on-month in March 2023. Additionally, the Reserve Bank noted that due to a combination of greater debt and interest rates, the cost of servicing household debt as a percentage of nominal disposable income climbed from 7.5% in the third quarter of 2022 to 8.1% in the fourth.
But it is not all doom and gloom for property owners. If you are able to find affordable home insurance you can beat the interest rate impact on your budget, during these challenging times.
Santam, one of the largest short-term insurers in South Africa, is here to help you with 7 tips on how to make your home insurance work for you:
1. Budget for potential hikes: Although this is easier said than done when interest rates rise, your mortgage payments may also climb. To reduce financial stress, create a reserve by adding cash to your savings or flexi bond when interest rates are more favourable or lower. That way, you'll have enough money to cover any future inflationary hikes.
2. Save costs with combined insurance: Some insurance companies, such as Santam, provideinsurance packages that cover your home, contents, and car all at once. This can be substantially less expensive than purchasing three individual insurance policies.
3. Explore value-added services: Your monthly debit orders may not always reveal savings. Some insurance companies provide discounts, free services, and other excellent value enhancements. Santam, for example, offersfree value-added features such as home emergency support, roadside assistance, and home drive assistance, guaranteeing that you are taken care of in a variety of situations with simplicity.
4. Shop around for affordable home insurance: Before providing a bond, most banks require homeowners to acquire property insurance. However, you may not have given your insurance premium much thought after moving in. It may be worthwhile to reevaluate your insurance and compare quotes from several firms in order to locate a moreaffordable house insurance alternative. Did you know that you are not required to use the original insurance company, even if it was given by the bank that granted you the loan?
5. Up your excess: Consider increasing your excess to save money on your monthly insurance expenses. Simply said, by choosing a bigger excess amount, you may be able to reduce your monthly insurance prices. Remember, you must ensure that you can truly afford to pay the excess if you need to make a claim. So, locate that sweet spot where you can save money without putting yourself in debt.
6. Tailor-make your coverage: Your insurance should be as one-of-a-kind as you are! Your insurance needs to alter as your life changes. If you've downsized your house, moved to a new location, or sold some expensive goods, you should update your insurance coverage. As a result, your monthly premiums may become more affordable and tailored to your specific needs.
7. When in doubt, speak to your insurance broker: If you have a broker working on your behalf (or not) and are having difficulty affording your house insurance premiums, contact your insurance provider. They might have some tricks under their sleeves to assist you. They may be able to provide you with a more cost-effective coverage option or advise you on how to lower your premiums. It's always worthwhile to have a discussion to discover what solutions are accessible.
Finding the right insurance
The biggest way to soften the blow of rising interest rate hikes is to find an insurer that will protect your home and give you great value for money. The best place to start is to shop around and compare quotes from different short-term insurance companies.
“Our suggestion is to find a short-term insurance company that has good peer and customer reviews, that is committed to good service, and that has a legacy of trust while still having an eye on the future. It might sound like the Goldilocks of insurance companies, but the “just right” insurance provider is out there if you look,” says Santam.
When comparing house insurance rates, keep the coverage provided by each policy in mind. While a lower premium may sound enticing, you must ensure that the coverage sufficiently covers your home and valuables. After all, true peace of mind comes from having adequate security.
If you are looking for a short-term insurer that looks for reasons to pay you, rather than reasons not to, visit Santam or call 0860 444 444 or your intermediary to request a quote.
This post was sponsored by Santam and produced by Adspace Studio.
