Insurance, its something that we all need, and the process is simple. The customer pays a monthly premium and the insurer will pay out the value of your insured goods in the event of something happening to them, like theft for example. It sounds simple doesn’t it? However, there is one part to insurance you might not be aware of. Upon the year anniversary of your policy the premium will most likely increase. You might be wondering what determines an increase? Why does it increase if I haven’t claimed? Let’s give you those answers to ensure you are well prepared for what’s to come

Increases on home contents, building and all risk items.

If you were to turn your house upside down, everything that fell out would be classified as home contents. Buildings is the structure of your home, while all risks are items that you take out of your home such as laptops, cell phones and reading glasses. Increases on these three areas are not technically a premium increase but rather influenced by Consumer Price Index (CPI). These items will most likely cost more to repair or replace a year a later due to inflation and this is the reason why insurers must increase the sum insured (the value of your cover).

What some customers tend to forget is that even though the premium of your sum insured will increase, so does the value of your goods. For example, your building premium has increased by 5% which will also mean that your value has increased by 5%.


Upon the renewal review, an insurer will assess if any claims have occurred in the past year, they will be on the lookout for the severity of these claims (value of the claim) and how often claims are logged by a customer. This information can result in an increased premium for the same amount of cover. If a customer is marked as a multi-claimant this could lead to an insurer paying out more in claims than what they are receiving in premiums which could also lead to a cancellation of a policy. Always think twice before claiming on small items as they could affect your premium or policy in the long run.

Vehicle depreciation.

As straightforward as it sounds, it isn’t the case. Yes, the value of your vehicle does depreciate every year and while insurers do take this into account, it is by no means the only factor which determines the premium. Majority of insurers’ claims are accident related with very little being stolen or write-offs. One of the main factors in determining vehicle premiums is the actual cost of repairing the vehicle and its parts, these parts will increase in cost with inflation and fluctuating exchange rates. Therefore, regardless of a customer’s claims history, premiums will increase to cater for the increase in the cost of repairing accidental damage.

Planning for the Renewal.

It’s safe to say that based on the factors that influence premiums such as vehicle parts, CPI, Inflation and claiming will have an impact on your premium upon renewal stage. Knowing what contributes towards an increase means planning can be put in place to cater for increases such as thinking twice before claiming on a small item and keeping money aside to cover the premium hike. The increase on premiums is something that won’t be changing anytime soon. What can change is how we manage our policies and plan for the increase.


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