Understanding exactly what you're reading when dealing with insurance is absolutely vital in getting the most out of your policy. We began our glossary of important insurance terms by covering letters A–E and then continued from F–L.
Here are some more of the most important terms you may come across when looking for car, life, building or household content insurance.
Market Value – Sometimes, your insurance may only cover the market value of your car. The market value is basically the amount for which anything can be sold or bought at any specific time, on any given market.
Mortgage Insurance Policy – Related to life and health insurance. This is a policy which covers the insured with benefits, intended to pay off the balance due on a mortgage upon the insured's death. It could also be used to meet the payments due on a mortgage in the event of the insured becoming disabled or critically ill.
Motor Insurance – Also known as car insurance or vehicle insurance. These types of policies cover you and your vehicle in the event of an accident, hijacking or theft. Different types include the bare bones minimum – Third Party - and also Third Party, Fire and Theft. Top of the line is Comprehensive Cover, which covers your vehicle in almost any event.
Mutual Insurance Company – This can broadly be defined as an insurance company owned by its policyholders. In other words, it has no shareholders.
Negligence – This is the failure of a duty of care, which usually results in damages. When we operate a motor vehicle, for instance, we agree to do so in a careful, responsible and law-abiding way. We are trained to do so, and that is how we acquire a licence to operate that vehicle. Dereliction of this duty can result in massive repercussions, such as your insurer refusing to meet your claim.
New-For-Old – A term referring to an insured item becoming lost or damaged, and no matter how old it may have been, the insurer replaces it with a brand new substitute without any deductions for depreciation. Also known as Replacement As New.
No Claims Bonus – If you, as the insured, can make it through a specific period of time without claiming, your insurance company will reward you. These rewards could even include huge discounts on your monthly premiums.
Occurrence – Relatively self-explanatory, but with a very specific meaning when it comes to insurance. It can be defined as an event that results in an insured loss, but is commonly distinguishable from an accident. A loss by occurrence doesn't need to be sudden or unexpected or fortuitous the way an accident is commonly defined. Loss by occurrence could result from repeated or continuous exposure to risk which eventually results in injury or property damage, neither expected, nor intended.
Ombudsman – Swedish for representative. The Ombudsman is an entirely independent, impartial office that resolves any disputes between policyholders and insurance companies. Their services are 100% free of charge to anybody who needs them. In South Africa, we have an Ombudsman for both short and long-term insurance, and they both release annual reports on the state of the industry.
Operative Clause – This is the clause in a policy which lists the circumstances in which the insurers will make claim payments.Over-Insured – This means that the sum insured is greater than the full replacement value of the property at risk. Therefore, Average will never be applied and the only risk that the insured carries will be the extra premium paid.
Peril – Plainly, a peril can be defined as a fortuitous happening which could cause a loss. Only perils specifically stated in the insurance policy are covered.
Policy – This is the written contract effecting insurance, acting as evidence of the terms of the insurance contract. It commonly includes all clauses, riders, endorsements and relative information. A policyholder, therefore, is the insured.
Policy Anniversary Date – A long-standing policy, such as life insurance, commonly requires an annual review to assess the situation of the policyholder.
Policy Schedule – A total outline of the cover provided under the policy. It shows all personal details of the policyholder, as well as the cover given and the relevant limits, sums insured and excess.
Pre-Existing Condition – With regards to health insurance. For example, if a person has recently suffered a heart attack and then wishes to get insurance, it means that this person wants to enter the insurance with a pre-existing condition. The risk of them having another heart attack, or suffering from related conditions in the future, could be higher. Therefore, the coverage might be limited, their premiums may be higher or they may have to get dedicated cover.
Premium – The price one pays in return for insurance protection for a specified risk, for a specified period of time.
Proof of Ownership – This is any form of evidence to show that the client actually owns the property. This could take the form of an invoice, photograph or certificate. For this reason, it's wise to keep all purchase slips for expensive items you've purchased.
Proof of Quantum – This sounds a lot more complicated than it actually is. The term refers to the value of any item being claimed. The insured will have to prove the quantum by submitting invoices for that item.
Quote – When searching for the best possible insurance product to meet your specific needs or budget, a person may request quotes from insurance companies. These quotes detail the cover options available, as well as the related premiums. CompareGuru does this for you – sourcing the best possible quotes from reliable insurers all across South Africa. Whether you're looking to insure your car, household contents, building or life – you can compare quotes online.
Coming Soon: Important Insurance Terms (R-Z)
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