Insurance is one of those things that everyone considers a grudge payment. It could, however make a huge difference in your financial future! What if you wanted to cancel the policy, or even change to a different insurer?
Do you face penalties or do you have to stick it out for the term like other contracts? Well, we did some research and found out the rules when it comes to cancelling insurance policies.
Some people think that they should cancel their policy if they are facing financial difficulties. This is actually a bad decision and you should reconsider this. Many people view an insurance policy as a luxury, like fancy restaurants or expensive gym contracts, but this should not be the case. According to Standard Bank's Johan van Greuning, cancelling your insurance policy could put more pressure on your pocket than you think.
No matter how tough times are it’s vital you don’t cancel your short-term insurance, particularly your motor vehicle cover,”explains van Greuning in a conversation with Standard Bank.
There are a staggering 65% of South African road users who don't have car insurance. This means that if you both don't have insurance and are involved in an accident, you will both be digging deep into your pockets. Alternatively, if you have an accident and the other party does have insurance, their insurer will pay for the repair of the vehicle, and you will end up paying off the costs of the repairs to the insurer.
Well you can technically cancel the contract 'with immediate effect' , however, this does not look good to other insurers when you reapply for a policy. It is advised that if you are considering cancelling your contract, that you give the standard month's notice. By following the correct procedure, this will ensure that you retain a good record as an insured party. The South Africa Special Risk Insurance Association's motor vehicle insurance policy states the following:
This policy may be cancelled at any time at the request of the insured, but in such cases no refund or pro-rata refund of premium will become payable.In many instances, the insurance company requests that the insured pay the yearly premiums in advance. The disadvantage of this then is that you will not receive a refund when you cancel your contract.
Although there might be a legitimate reason as to why you are cancelling your insurance policy, it is advisable to be cautious when doing so. Many insurers may request to know the reasons why you cancelled your previous contracts. This could impact on your chance of getting a new insurer elsewhere. The new insurer might ask your previous insurer about claims or losses made.
They may also ask about any previous cancellations of policies. This could sway your potential insurer to reject your contract because of your past history. Also, just remember that the minute you cancel your policy, you are not covered. This means that should you have a problem, will have to pay out of your own pocket. This could have disastrous results on your financial and emotional state.
Even if you may have terminated a previous contract, be upfront and honest from the onset. This will prove that you have nothing to hide about previous insurance history. Changing policies could provide you with exactly what you are looking for. You could find a policy that is more affordable for you, or one that has more benefits to suit your day-to-day lifestyle. If the policy is not for you; find the one that best suits your needs at the time. Take care though, to not keep chopping and changing as it could have a poor outlook when you are searching for new insurance.