And as is often the case, all expenses are being scrutinised. Businesses are scaling back on operations and advertising expenses to name but a few.

With personal income being reduced or coming under thread, individuals often cancel life and short term insurance policies.

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In a recent release by Shaun Neuhoff, managing director of AA Insurance Supermarket, he stated, “Totally dispensing with insurance is a dangerous financial tactic, one that actually ends up costing more than saving money.” Instead, he said, “look for ways to reduce costs rather than eliminate them”.

Neuhoff warned against this stating the fact 35 per cent of vehicles in South Africa are insured – 65 per cent are not. “What this means is that if you are uninsured, you will have to rely on the other person’s insurance to cover you in the event of a crash, if the other person has insurance (and, given the numbers, this is unlikely).”

He advised individuals to consider the following options. “AA Insurance Supermarket sources more than ten quotes on car and home insurance to match your requirements and without compromising the extent of the cover you have. Other options include downgrading to comprehensive cover for low mileage drivers (the latter often offers reduced premiums). Increasing your access, or changing your cover from ‘retail value’ to ‘market value’ will also reduce your premium.”

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One can also change your cover to only pay for total loss and third-party claims. As with all of these options Ts and Cs apply and with this option, your insurer will not cover accident damage repairs which may well leave you with more challenges than solutions. Downgrading to a third party, fire and theft product only – although the cheapest offer available – is still a better option than to the canceling of your policy.

“Important to remember though is that whilst your vehicle is being financed, having comprehensive insurance is non-negotiable and the finance house can, and probably will, add a policy and the cost thereof, to your premium.”

“But, insurance is not – as many believe – a luxury purchase. It is an essential financial tool which is aimed at protecting you financially should the need arise. It is, quite simply, not a luxury, but a necessity,” concluded Neuhoff.