Insurance Terms You Should Know

By Tokkie Ferreira       Last updated Oct. 26, 2017


Purchasing an insurance policy can be very confusing. Long hours and numerous enquiries!

When you do find one that fits your pocket and needs, the policy is filled with insurance jargon that often seems like it is written in a vague foreign language and makes it hard to understand.

What does it all really mean and how will it affect you if you ever get into an accident?

Before you sign anything, read this article. I have listed the most common terms that insurance companies use and have defined them to help you understand the contract you are about to sign.


Commonly Used Policy Terminology:


Car Hire:

This term refers to the insurer paying for a rental vehicle in the event of your vehicle having to go for repair work after an accident or finding your vehicle after it was stolen. Repairs and recoveries can take up to a month, so make sure that your Car Hire is listed for 30 days or 60 days.

In the meantime, car hire will help you get your life back on track again. Having the Car Hire option on your insurance policy will most likely raise your monthly premiums, but will be worth it when you need a vehicle while yours is being repaired.

If you have two cars in the family and see no need for this option, you can always have it removed from your policy to save you more money.


Claim:

You submit a claim when you have suffered a loss. With car insurance, it could be a case of an accident or maybe your car is stolen, broken into, or damaged in some way.

A home insurance claim will be filed when your home has sustained damage or contents have been stolen. You, therefore, claim from your Insurer who will put you in the same position that you were before the loss. The more claims you file, the more your premiums may increase each year.

It is a good idea not to claim for every little mishap. A small example may be if a shopping trolley should bump your car and the damage isn't too severe, just let it go. Save your policy for severe damages/losses that might arise.


Excess:

The excess on your purchased policy is the first amount payable when submitting a claim. This is the uninsured part of your loss. When your car has been in an accident, the excess must be paid, by you, to the repair company.

Some insurers offer a fixed excess and other companies will charge a percentage of the total on the claim. Many insurance companies offer an excess waiver. This waiver will take that first payment away but will add more onto the monthly insurance premium.


Home Insurance/Houseowner Insurance:

This insurance policy only covers your home. It will cover your house including walls, foundation, roof, garage, and permanent fixtures. It will not cover loose standing items that you have in the house.

If your car is stolen from your garage, this Home insurance will not cover the theft of the vehicle. However should your building/garage door get damaged during the theft of the vehicle, it will be covered under your Houseowners insurance. It will also cover house damage sustained by natural disasters such as flooding from rainstorms. There is no cover for burst pipes or geyser flooding resulting from wear and tear.


Personal Liability Cover:

This is a sub-policy generally covered under home contents coverage. This covers you for financial perils you may be held responsible for. Such cases might be if your dog bites someone or if a guest gets hurt at your residence. Instances are rare, but they do happen in everyday life.


Policy:

This is your written agreement with the insurance company. It tells you about the insurance that you are purchasing. The company states what they will cover in the policy and detail all information needed. The company will also list what they will not cover. All details will be given to the insured in their policy documents.


Portable Possessions Cover/Personal Items Cover:

This is another category that can be attached to your home content or vehicle insurance policy. This covers items that you take out of your home or car on a daily basis.

Such items can be laptops, cell phones, sporting equipment, wheelchairs, etc. You may specify these things on your policy and they will be covered for that general amount.


Premium:

The premium is the monthly fee that your insurance company will charge for the duration of your policy to ensure you are covered. If a premium is unpaid then you will not have cover for the period where the premium was unpaid.


Riot Cover:

This is a sub cover that will be attached to either your home or car insurance policy. This coverage insures your belongings and home against damage sustained by riots or war. This cover is provided by SASRIA.


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Policy terminology can be difficult to understand. Neither of us wants to make a wrong decision that can have disastrous consequences all because we did not understand the small print of our policy. It is better to do your research and be informed about the contract you are signing.

It is better to be safe than sorry when disaster strikes the home or your vehicle.


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