How to Avoid Common Short-Term Insurance Mistakes

By Tokkie Ferreira       Last updated May. 04, 2018

A short-term insurance policy may seem straightforward until you have to actually sign up for it. Short-term insurance, like other insurance policies, can seem overwhelming when you are trying to understand their complexities. The experience can be worsened when you have to deal with a rejected claim as a result of your inadequate knowledge of the policy.

It is essential for you to take the necessary steps on your part to avoid the common mistakes that can ultimately lead to a rejected claim.

Here are some mistakes many people make when dealing with short-term insurance and ways to avoid them:

Choosing the Wrong Insurance Company

When looking for an insurance policy, it is extremely important to be wary of unreliable insurance companies that are mostly interested in collecting your premiums and might take advantage of the 'fine print' of the policy to deny a claim.

As you are required to pay your premiums, your insurance company is also expected to be ready to bear the risk and pay out when you make a genuine and honest claim. Some insurance companies, however, have unfortunately made denying claims a part of their business models. The good news is that you can avoid such insurance companies.

For every company, the percentages of claims paid of those submitted are often made public. You can also access the number of complaints brought against insurance companies. Make sure you research about an insurance company before signing up for short-term insurance.


Being Underinsured

Many individuals are underinsured because they have no idea of how the valuation of assets work and the impact on their premiums. While this may not void your claim completely, it will lead to a loss when you are settled.

The appropriate value of any vehicle or property should be the replacement cost and not the original value when you bought or constructed it.

If an insured asset has a replacement value higher than the original cost, it is better to value it at its replacement value. It will actually attract a higher premium, but this will be beneficial for you and it will help you handle the loss if such an asset is lost or destroyed.

Providing Wrong or Incomplete Answers

There are questions in insurance that have serious implications and it is essential that you answer them truthfully and carefully. Providing an incorrect answer intentionally or otherwise can void your claim.

If for instance, you are asked if your windows have a burglary proof mechanism and you answered yes without mentioning that a tiny window in the bathroom doesn’t have one, your claim can potentially get rejected on this basis if a thief enters through the same bathroom window and steals valuables.

You have to ensure that all information you provide to the insurance company is correct and clear of any half-truths as that can lead to rejection of your short-term insurance.


Agreeing To a Higher Excess

The excess amount is the out of pocket expense you will pay in the event of a loss or damage to an insured item or property.

Ideally, the higher excess you agree to pay in the event of a loss, the lower your insurance premium. Agreeing to a higher excess may seem like a good way to minimize the cost of a short-term insurance premium, but it can prove costly when you incur a loss.

You will have to pay the total amount stipulated as the excess before the insurance company comes in to take care of the shortfall payments.

Get A Free Broker or Get A Quote - Click Here

Not Notifying Your Insurance Company About Changed Risk Profile

Insurance companies use your risk profile to determine the pricing of your policy and will have a reason to void your claims if they notice that you did something that could have increased your risk profile without letting them know about it.

If you move to a new house, for instance, it is possible that your new neighbourhood is more susceptible to burglary. This factor increases your risk profile and it is expected that you notify your insurer so that they know if any adjustments need to be made to your short-term insurance policy.

If you fail to do this and incur a loss, your policy can potentially be voided on this ground.


Making Assumptions About Coverage

It is wrong to assume that something is covered without being sure of it. It is essentials to be certain of what is considered a part of household contents and vehicle contents and what is not.

Some insurance companies do not classify gadgets such as cell phones, cameras, jewellery and laptops as parts of household contents. Before signing up for a policy, make sure you understand what is covered and what is not to avoid future disappointments.

Waiting too Long to Notify the Insurance Companies About a Loss

There are many short-term policies that require the insured to report any loss or damage to the insurance company within a limited time. Usually, 30 days is considered enough time to notify your insurance provider about a loss and you really need to avoid the mistake of waiting too long to make a claim.

Short-term insurance is definitely a great way to manage risk even when you are waiting for a better insurance deal.

Short-term policies can be as complicated as any other insurance policies, so you need to do your best to avoid common errors people make that can deny you of your settlement in case of an unforeseen event.

Partner with a leading insurance broker in South Africa to assist you with your short-term insurance needs.

Have Any Questions?

Trading Hours: Mon-Thu (08:00-16:30), Fridays (08:00-16:00)  |  After Hours: 082 839 5953

Site/Marketing by KBP