What you need to know about your short-term insurance

2014-12-01 06:00

As the year winds down, you might be contemplating a holiday or just looking forward to a long-anticipated break with your family and friends.

Regardless of whether you are going away or staying at home, it is worth your time to take note of the finer details around your short-term insurance.

Neesa Moodley rounds up some of the things you really need to know


The excess is the amount you are asked to pay upfront before your insurance claim is paid. The reason for this is to incentivise you to manage risks better.

If the cost of the damages is equal to or less than the excess amount, it might be cheaper to pay out of your own pocket rather than filing a claim.

The excess could be a flat amount or a percentage of your claim. For example, if you are in a car accident and the insurance claim amounts to R50?000, you would have to pay an excess of 10% of the claim, or R5?000.

Additional excess: If you read your policy carefully, you will find your insurer may apply an “additional excess” under certain circumstances. For example, if your car was being driven by a driver who was younger than 21, you could be asked to fork out an additional excess of R2?000. This would bring the total excess to R7?000 and the insurer would pay the balance.

Recovering the excess: If the accident was not your fault, you still have to pay the excess upfront and your insurer will then try to recover the amount from the other party.

If the other driver was not insured, this can take a long time and in some cases you may not recover the excess from the other driver at all.

MiWay’s head of online marketing, Rory Judd, says times when you may not recover the excess include:

»?When the merits of your claim do not justify the recovery of the excess;

»?If you don’t have the details of the guilty party or he/she can’t be traced;

»?If the guilty party does not have any income or assets to attach; or

»?When the legal costs are greater than the recovery costs or the excess amount.

Increased excess, reduced premiums: You can choose to increase the excess amount on your policy to reduce your monthly premiums. But if you do this, make sure you have the required amount set aside that is easily accessible.

For example, if you increase your excess to R6?000 to reduce your premium, you should have R6?000 put away in an emergency fund.


Traditionally, insurers would pay out a rand amount when settling an insurance claim, particularly for household insurance claims.

But the frequency of fraudulent claims has led to insurers looking at innovative ways to settle claims. An insurer might not necessarily pay out cash, opting instead to replace the item.

Most cellphone insurance contracts work on the basis of replacement rather than a payout. This could be problematic if, for example, you replace the item yourself and then submit a claim expecting to receive a cash payout.

Some insurers will pay out a lower amount if you request a cash payout instead of replacement. Check the fine print.

Marius Neethling, personal lines underwriting manager at Santam, says Santam uses a number of methods to settle claims, such as a cash payout or a claims card, or the insurer may opt to replace or repair the item.

“There is a clear benefit to the policyholder if he or she uses the claims card method because there is an opportunity to receive further cash back on the card if the policyholder opts to shop at one of Santam’s preferred suppliers,” he says.

According to Neethling, the last alternative is a cash settlement via an EFT directly to your bank account.


When you take out car insurance, your insurer or broker will ask you who the regular driver of the vehicle is.

This is important because it is one of the factors taken into account when your insurer calculates the risk and the premium you have to pay.

For example, if the regular driver is your 20-year-old son, the risk is considered to be higher than a regular driver aged 50, and your premium will be higher as a result.

Judd notes that you might be tempted to “be economical with the truth” to avoid paying a higher premium, but this will only lead to your claim being declined if your insurer finds out you have lied. “You could also face higher premiums in future,” he warns.

According to Judd, some insurers might ask you to list all the people that may drive the car at any point. For example, all the licensed drivers in your household.

You should check with your insurer or your policy document to be 100% sure you have disclosed the correct information.

If there is a change of drivers, for example, you pass your old car on to your child or you are going to be out of town, make sure you update the regular driver details on your policy.


Just as your insurance policy binds your insurer to meeting certain terms and conditions, you as a policyholder also have responsibilities that you need to meet.

Gari Dombo, the managing director of Alexander Forbes Insurance, says you should tick the following boxes to ensure your claim is successful:

»?Disclose all previous loss details.

»?Make certain that items are insured either specifically or that they are included in the definition of property insured.

»?Check that all items are covered at the place they need to be insured – some cover is worldwide, some is territorial and some cover is only for inside your residence.

»?Be aware of all exclusions.

»?Make sure the amount you are insured for will cover the replacement cost of your possessions.

»?Keep invoices of expensive purchases, as well as jewellery valuations.

»?Be aware of the general conditions of your policy.

» Be aware of the claims conditions of your policy.

» Read the fine print of your policy carefully.

» Check your cover annually to ensure it is adequate.


Neethling says there are a number of reasons an insurer would repudiate or reject a claim.

“This occurs most often when the policyholder provides incorrect or false information to the insurer,” he says. Reasons for rejected claims include:

»?If the risk address of a household contents policy changes but the insurer has not been notified of the change of address.

» A lack of evidence to prove a burglary has taken place.

»?Insufficient cover. For example, you might have a household contents policy that excludes all-risks cover.

All-risks cover is important because it covers your mobile belongings such as cameras, laptops and jewellery regardless of whether the loss or damage occurs on your property or elsewhere.

»?Underinsurance can cause a settlement to be lower than the replacement value of an item. You should bear this in mind when determining your insured values.

Christelle Fourie, the managing director of MUA Insurance Acceptances, says that most people tend to take out a household contents policy, but then neglect to update the insured value each year, despite the fact that they may have bought new furniture or appliances.

“Another common error is forgetting to take inflation into account.

“For example, a piece of electrical equipment that cost R5?000 10 years ago could now cost twice as much to replace,” she says.

»?Insurance cover is often granted on the basis that some conditions are met.

For example, you may be required to have burglar bars or gates on all opening windows and doors as well as a linked alarm.

If there is a single door or window without bars or a security gate and your home is broken into, the insurer can reject your claim on the basis of nondisclosure.

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