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The word accident refers to an incident that is unintentional, unforeseen and sudden. It can lead to anything from damage and loss to injury and death.

Accidental Injury

As the name suggests, this is an injury that happens by accident. So it is unintentional, unforeseen and sudden.

Additional Cover

If you want to add extra things like car hire or increased liability to your policy, you do this at an additional premium.

All Risks/Portable Possessions

Anything that you wear or keep on you like jewellery, your watch, smartphone and laptop are what we call portable possessions. They are covered under an all risks policy. There are two types of portable possessions: unspecified and specified.

Unspecified: This section provides cover for lower-valued items. These things do not need to be individually specified; however, you would need to select a total amount for which you want to cover all of them. The maximum amount that you could claim for, per item, under this section, is determined by the insurer. 

Specified: This section provides cover for items of a higher value. These items must be individually specified, and you will pay a premium for each of them. The minimum amount for a specified item is determined by the insurer. Items like cell phones, prescription glasses or bicycles must also be specified if you want them covered, regardless of their value.


When an accident happens and both parties involved are to blame. The degree of ‘blame’ is then split between the parties, to a maximum of 100%. Let’s look at an example: When both parties are equally to blame, there is 50% - 50% apportionment. The percentage of responsibility placed on each party can vary and the cost of the damages is split according to this percentage. The payment, and who gets it, is based on the calculated difference after the apportionment percentage has been applied to each party’s damages.  


Should someone set fire to a property on purpose, it’s called arson and it is a very serious crime. Arson is generally not covered by insurance, but you’ll need to check the terms and conditions that apply to your insurance policy. If someone sets fire to their own property just to get money out of their insurer, this is considered insurance fraud and it won’t be covered (never mind the fact that the legal consequences could be very severe for that individual).


Your insurer will send an assessor do an inspection if you’re ever in an accident and your car is damaged. He/she will carefully check and calculate the damage. They will then put together a full report for the insurer. Assessors will also be sent out to assess home contents and any buildings claims you might have.


When you hear this term, it’s usually used together with underinsurance and settlement. That’s because, if you’re underinsured, the average rule will apply and a settlement amount is what you’ll get. Here’s a simple example of how the average rule works and the terms you need to know:

Think about this scenario: you have a house and you’ve insured it for R200 000. This is the sum insured. Now imagine that your entire house is swept away in a flood and the cost to entirely rebuild it is R300 000. This is known as the value at risk. Now imagine this – a storm blows a tree down and it falls onto a part of your house, causing R60 000 worth of damage. This is known as the loss. To calculate the settlement amount, the average calculation would be applied. It works like this:


Sum insured            /  value at risk      x loss            = settlement

R200 000                /     R300 000           x R60 000    = R40 000

Amount not covered                                                    = R20 000                                

This R20 000 is probably a cost you were never prepared for. To avoid finding yourself in this situation, you must update your sum insured regularly.


Here’s another scenario: you’ve insured the valuable contents in your home for R100 000 – the sum insured. Now imagine that all your valuables are swept away in the flood too. The cost to replace them is R200 000 – the value at risk. What about partial damage to your home contents? Imagine a tree falls onto a part of your house and causes R20 000 worth of damage to your contents. This is known as the loss. To calculate the settlement amount, the average calculation would be applied. It works like this:

Home Contents

Sum insured            /  value at risk      x loss            = settlement

R100 000                /     R200 000          x R20 000    = R10 000

Amount not covered                                                    = R10 000                                

This R10 000 is probably not a cost you were prepared for. To stay clear of this potential unexpected payment, you must update your sum insured regularly.


This happens when an insurer has to replace an item that has wear and tear on it with a brand-new item. As wear and tear is not an insured peril, you are placed in a better position than you were before the claim. As an example, if a tyre that has substantial mileage on it has to be replaced with a brand new one. Thus, the insurer will deduct the amount, which they had to pay to place you in the better position, from your claim amount.


An insurance broker acts as the middleman between a client and an insurer. You can use the services of an intermediary to sell, solicit or negotiate insurance on behalf of a client for compensation. They can make decisions on your behalf. They will work out a needs analysis and then can give you advice on which cover to take out. They can even assist you with the claims process. Intermediaries can charge an advice fee, for additional services. This must be justified.


When someone forces themselves or uses violent means to gain illegal access to your property, with the intention of causing loss or damage. 

Changes in risk

Changes could be moving to a new house or changing where you park your car at night. These things may affect your risk and it’s your responsibility to tell your insurer about these changes.

If you don’t know if a change will affect your risk, ask your insurer. It’s always better to make sure - non-disclosure of certain information could put your insurance policy and any claims you may have at risk.


When you make an insurance claim, you are formally asking your insurer to indemnify you for the loss of, or damage to, an item you’ve insured. 

Claim Finalisation

This is the outcome of a claim you might have. It can either be settled or rejected – and if it is settled, how will it be done like repairing, replacing or giving you cash instead.

Commencement Date

This is the date and time your insurance cover begins. If your insurance policy starts on 1 February at 12:00 and you have an accident after that date and time, you will be covered.  You must, however, stick to all the terms and conditions of your insurance policy to enjoy full cover.


The payment by insurers to intermediaries for selling insurance policies on their behalf is referred to as commission. It also covers ongoing intermediary service that the intermediary provides to the client, like changing, updating or renewing a policy. The amount paid is controlled and reflects on the policy schedule as it forms a percentage of the premium.


This means to pay for loss or damage that you have suffered or for which you are legally liable.

Comprehensive Vehicle Cover

This is full cover for just about any risk. With this cover you’ll be able to claim if your vehicle:

  • is damaged or written-off in an accident;
  • is stolen;
  • or if you have caused damage to another parties’ property (this is known as third party).

Resultant Damage and Consequential Loss

Resultant damage

Any extra loss or damage that happens as a direct result of an insured peril is known as resultant damage. It could be things like damage caused to the insured vehicle as the result of a hijacking.

Consequential loss

Any loss or damage not directly caused by an insured peril but arising as a result of such damage. This includes, amongst other things, compensation for inconvenience, interest, money lost or any liability (or legal responsibility) you may incur because of a delay in finalising your claim, or a delay in the repair or replacement of the item for which you claimed

Contract of Insurance

The legal agreement between you and your insurer is a contract. It determines the claims which the insurer is legally required to pay. In exchange for payment, called the premium, the insurer promises to pay for loss caused by perils covered under the policy wording. The insurance contract consists of the policy schedule, terms and conditions and any telephonic conversations.


The dictionary definition of the word cover is the act of ‘protecting or providing shelter for something’. This is basically what insurance does. While insurance can’t stop things from happening, it helps you to recover from them by replacing or repairing your lost or damaged items provided it is as a result of an insured peril.

Cover Note/Noting of Interest

Noting of interest is when a third party, lender, is designated as the first loss payee in respect of any payment made under the policy. A life policy is an example of this as it can be noted to a bank which has given a home loan to the policyholder. The life insurance noting will pay the bank proceeds of the life policy, before the beneficiaries of the policy.


A declaration statement should give true and complete information. It doesn’t exclude or misrepresent any material facts. The declarations you make form the basis of your insurance contract. If these declarations are false or misleading, an insurer may cancel your insurance policy or reject your claim.


An insurer might refuse to take on a certain risk or to enter into an insurance contract. They could also decide to cancel an existing insurance contract. There might be various reasons for this, like the fact that that they don’t underwrite that particular risk or because of a person’s claims history. It is important that you let your new insurer know of any previously declined insurance.


To disclose information means you make it known. Non-disclosure means keeping information a secret. It’s your duty to disclose all information that could be relevant to your insurer accepting your risk. Like if you move homes, you need to tell your insurer, as a change in address could change your risk. This could affect their willingness to keep giving you cover or to pay a claim. If you’ve ever been found guilty of dishonesty or fraud before, you will need to tell your insurer.


An extra condition or restriction added to an insurance policy is an endorsement. It may be added to a home contents policy to say that you’ll only be covered for burglary and theft, if you have a burglar alarm and it’s activated when no one is home.   



There is a portion of the claim amount that is not covered by insurance, if you have a claim. This is called excess and will have to be paid by you. An excess could be a fixed amount or a percentage of the claim amount, depending on your insurer.

There are four different kinds of excesses:

1.       Basic Excess

This is the minimum, first amount that you have to pay towards your claim. 

2.       Additional Excess

This is an excess that must be paid in addition to the basic excess and is based on specific risk criteria. If a driver is under the age of 25 or has only had his/her licence for a certain number of years, additional excesses may apply.

3.Voluntary Excess

This is an extra excess you choose to pay in exchange for a decreased premium.

4. Cumulative Excess

This is the total of additional excesses, if they are all for the same claim. 


These can be general or specific and are not covered by your insurance policy.

General exclusions: These are events that are not covered by the insurer, no matter what cover is selected or which risk items they have insured. An act of war is an example of this.  

Specific exclusions: These are events that will not be covered by the insurer and only apply to specific insured items or cover types. A specific exclusion under a vehicle policy is if you, or anyone you allow to drive your insured vehicle, or anyone acting on your behalf, leaves the car’s keys and/or ignition keys of your vehicle in or on the vehicle.

Ex Gratia Payment

This is when a payment is made to you by the insurer, at their discretion. It is an expression of goodwill when there is no legal obligation to pay the claim in terms of the policy. This payment is made without your insurer admitting any responsibility under the policy. Ex gratia payments cannot be regarded as a binding standard which will be followed by the insurer in the future.

Good Faith

When going into an insurance contract, both the insured and the insurer do so in good faith and it’s an important part of a good relationship. From the insurer’s side, this means not misleading the insured or confusing any policy terms and conditions. From the insured’s side, this means disclosing all necessary information and not distorting any facts that could be relevant to the insurer accepting your risk.


This is a condition that may make or increase the chance of a loss resulting from an insured peril.

When an underwriter considers your risk to decide whether to insure you or not, or for how much, he/she takes two basic factors into consideration:

1. A physical hazard that affects the chance of loss, like a home without burglar bars.

2. A moral hazard. This is more difficult to recognise as it relates to the honesty of the insured.


Home Contents

These are all the things that fill your home like furniture, appliances, ornaments and clothes. It’s everything you would take with you if you moved to a new house. You must insure these items for their current replacement value, not what you paid when you bought them.  Also remember that you can’t select certain items to insure like a fridge or TV.  Another term you may come across with home contents is New for Old. This is when an insured item is lost or destroyed and is replaced with a brand new, similar item.


Another name for burglary, housebreaking is when someone forces their way into premises with the intention of stealing and/or causing damage.

Household Member

Any person (over the age of 15) who lives with you, the insured, at your residential address. It doesn’t include tenants and domestic workers.

Insurable Interest

If you want to insure something, you need to have an insurable interest in it. This means that youbenefit financially by protecting it or you could suffer financially if it was lost or damaged. Generally, insurable interest is based on ownership or legal possession.


This is an arrangement between you, the insured, and an insurance company. We offer you indemnity or compensation for liability, damage, or loss resulting from insured perils.

Insurance Company/Insurer

This is the company who agrees to indemnify or compensate you, the insured, for losses resulting from insured perils.

(The) Insured

If you are covered by an insurance policy, you are the insured.

Insured Peril

This refers to a specific risk or cause of damage or loss that is covered by an insurance policy. Insured perils are things that are unexpected or accidental, like fire, theft or flooding.


When your insurance premium isn’t paid on time, it will lapse. For example, if your premium is due on 1 February, and your deduction does not go through, the insurer will allow a 15-day grace period before attempting to deduct it again. (Note: This grace period only applies if the policy has been active for a minimum of two months). If that is successful you will have cover. If not, you won’t be covered. You do however have the option to arrange a special deduction, which will then cover you on a pro-rata basis for the rest of the month.

Level of Risk

Insurers establish risk based on two factors:

1. The probability of damage or loss occurring:  This refers to how likely it is that a loss will happen. For example, in South Africa, your car is more likely to be damaged in an accident than an earthquake. So, the probability of loss from an accident is high while the probability of loss from an earthquake is low.

2. The cost resulting from that loss or damage:  This refers to the monetary value of a loss, and the terms high and low are also used to describe this. An example of this is a car worth R500 000. It is much more expensive to repair or replace than one worth R130 000. This means that the first car is a high risk while the second is a low risk.

Liability Insurance

This is also known as third party insurance. It offers indemnity or compensation to a third party if you’re held legally responsible for the death or injury of a third party, or for damage to his/her property. There are two types of liability insurance:

  1. Personal liability: This is for you as an individual, when you are held personally liable for the death or injury of a third party, or for damage to his/her property.
  2. Public liability: This is for businesses that sell products or provide services to the public and provides indemnity or compensation for claims made against them. For example, if a customer falls and breaks his leg after tripping over an uneven step at an office building and claims against the business for the injury, this is a public liability claim. This is when a member of the public is holding the business responsible for their injury.


Loss can be damage to property as well as the injury or death of a third party. It’s divided into four categories:

  1. Liability losses/third-party losses
  2. Own damage losses
  3. Sentimental losses
  4. Consequential losses

Liability Losses/Third-party Losses

This is when you’re held legally responsible for:

  • damage to someone else's property; and/or
  • injury or death of a third party

A court may hold you responsible for either of the above and order you to compensate the third party for the damage, injury or death. You would suffer a loss because you’d have to pay money to clear yourself of this liability.


Own Damage Losses

This refers to the losses you may suffer if there is damage to your own property or if you’re injured as result of an insured peril. Own damage losses can result from a few insured perils, which are defined in your insurance policy.


Sentimental Losses

This is a loss that insurance cannot pay for because the value of the item is sentimental and not financial. Sentimental damage, like breaking a promise to marry, can’t be insured.

Loss Adjuster

A loss adjuster may be sent to your home after a claim is made to assess the damage or loss that you’re claiming for. They are employed by an insurer to validate a claim. They will ask questions to clarify the facts of the claim, provide a summary of this validation and make a recommendation to the insurer who will make the final decision.


Malicious Damage

If someone causes damage to the rights or property of someone else, on purpose, this is called malicious damage.

Material Fact

A material fact is anything that will influence an insurer’s decision to insure you or not. If they decide to insure you, what terms and conditions they’ll apply, like excesses and policy exclusions.

Material Misrepresentation

A few questions will be asked when taking out an insurance policy. This is so that the insurer can completely understand the risk they’re taking on by insuring you. If you’re not entirely honest when you answer these questions, and you don’t share the information the insurer needs to know before accepting your risk, this is known as material misrepresentation.

No-claim Bonus (NCB)

This is great. You could qualify for an NCB if you haven’t claimed from insurance for a certain number of years (usually between one and five). This could mean that you get a discount on your insurance premium. There are certain conditions for receiving this bonus, like having had comprehensive insurance, without interruption, for a set time.

Ombudsman for Insurance

If you don’t agree with a decision made by your insurer, like if they rejected your claim, you can approach the relevant Insurance Ombudsman. This is an independent official who investigates complaints made by the insured against an insurer. He/she is responsible for protecting the interests of both parties and for settling disagreements between the two fairly.

Personal Accident Insurance

If you’re injured, disabled or pass away as the result of an accident, this type of insurance will cover you.


The contract between the insured and the insurer about the cover taken out by the insured, and the terms and conditions that apply.

Policy Schedule

This document lists all the policyholder’s cover, their premium, deduction dates, excesses, and endorsements. It also contains the declarations made by the policyholder (where relevant).



An insurance policy in your name, means that you are the policyholder. The policyholder isn’t always the insured person. If, for example, you took out an insurance policy for your child’s car, you would be the policyholder and your child would be the insured.

Policyholder Protection Rules

The Financial Sector Conduct Authority sets rules which must be followed by insurers when it comes to dealing fairly with policyholders.


This usually paid monthly to your insurer for the cover they provide. It is based on your individual risk profile.

Proof of Ownership

When you claim for items that are insured, the insurer will ask you for proof of ownership for that item. This is something like an invoice or a valuation certificate. It should have your details on it so that you can prove that you own the item and are not claiming for something that never existed.

Proof of Quantum

This is the document like an invoice or a valuation certificate.  It shows the value or cost of the insured item you’re claiming for.

Pro Rata

Pro rata refers to a share of something. In insurance, it usually refers to premiums. An example is if you took out an insurance policy on 20 June, you would only pay a portion of the monthly premium (a pro rata premium) because you only had cover for a part of the month (10 days instead of the full 30).


This is an estimated premium for an insurance policy. It could change depending on the type of information that you give an insurer during underwriting.

Regular Driver

The person who drives an insured vehicle more than any other person, and whose name is on the policy schedule for the vehicle, is the regular driver. If your regular driver/s aren’t listed on your policy schedule, you will need to add them by contacting your insurer.



Insurance companies also need insurance. This covers them in the event of having to pay out a large number of expensive claims. Say for example, a massive storm hits a large part of the country and causes much damage and loss. There will be thousands of claims from customers at the same time. This is when the insurance company might need assistance from their reinsurer to cover these claim costs.


If you’ve cancelled your insurance policy and restart it, this is called reinstatement.


Insurance policies are usually renewed each year in the anniversary month that the policy started. This is when premiums are increased or decreased based on different factors like the country’s economic situation, changes in your risk profile and your claims history.


An insurer will reject or not pay a claim for a number of reasons. For example, if the insured did not honour the terms and conditions of their insurance policy. 


In insurance, there are different uses for the word risk. There are risks that apply to situations that involve danger, e.g., a fire risk. You, as the insured, could be considered a good or bad risk, depending on things like your insurance history. If you’ve made lots of claims in the past or had lots of interruptions in cover, you could be considered a bad risk. On the other hand, if you have a good claims history and have had constant cover for many years, you would be regarded as a good risk.

Visible Forcible Entry or Exit

If your car or home is broken into, your insurer will want to see signs of forced entry or exit as a condition of paying your claim. This could be a broken window or lock.

The Road Accident Fund (RAF)

All drivers of vehicles on South African roads are automatically covered by the RAF for liability claims for death and injury caused by a third party. All vehicle insurance policies in South Africa have exclusions for any cover provided for by the RAF.


Who can claim from the RAF?

  • A person who was injured in an accident (excluding a driver who was the sole cause of an accident);
  • A dependent of a deceased breadwinner who was injured in an accident;
  • A close relative of a deceased person who was injured in an accident, who paid for a funeral;
  • A person under the age of 18 (with assistance from a parent or legal guardian) who was injured in an accident.


The property that can be saved from a fire, storm, theft or accident in either a damaged or a partially damaged state is salvage. Examples of this are the wreck of an accident-damaged car, a stolen and recovered item or a portion of a hi-fi set left after a burglary.

Sum Insured

The amount that you insure your property for is the sum insured. It is also the maximum amount that the insurer will pay for a claim.


Terms and Conditions

These are the rules that relate to your chosen insurance cover.


Third Party

This is someone involved in a claim who isn’t the insured or the insurer. For example, if you drive into someone, the person in the other car is the third party.


Third Party Only Insurance

This cover allows you to claim for the damage you caused to other parties' property. While it is the most cost-effective cover, it is important to remember that you won’t be insured for the theft of your car or for any damages to your car.

Third-Party, Fire and Theft Insurance

This insurance covers you if you’re in an accident and a third party is injured or their property, like their car, is damaged. It also covers your vehicle for fire damage or if it’s stolen. It doesn’t cover any accident damage caused to your vehicle.


When the value of cover you have chosen for your property does not cover the full value of a claim, you are underinsured. If you took out buildings cover of R1 million for your home but the cost to rebuild your home is R2 million, you are underinsured by R1 million. The principle of average will be applied to calculate the amount the insurer will pay.


This is the company that decides to accept a specific risk at a specific premium. They appoint people who look at the risks of insuring a person and their property, based on their answers to specific underwriting questions, and other factors like their insurance and claims history. These people will decide on behalf of the underwriter if they’re going to accept the risk, how much cover they will provide and what premium will be charged.


Underwriting is the process of collecting information from potential customers to decide whether or not to accept the risk of insuring them and what premium to charge. 

Valuation Certificate

This is a document that shows the value of certain high-value items like jewellery or antiques. It can be used to show proof of ownership when claiming from your insurer.



Any motor vehicle or light delivery vehicle (LDV) as well as motorbikes, caravans and trailers.


Vehicle Insurance

Vehicle insurance provides cover for various insured perils. These include accidental damage, theft, and third-party cover. The insured perils you’re covered for will depend on what vehicle insurance you have. This could be comprehensive, third-party, fire and theft or third-party only.

Wear and Tear

Damage to an item as the result of regular use or use over a long period of time is called wear and tear. This is not covered by insurance

Write-off/Total Loss

If you are in an accident and your vehicle can’t be repaired or if repairing it would cost more than the value of the vehicle, the insurer will write-off the vehicle.