Short-Term Insurance and Terms You Must Know

 Short-Term Insurance and Terms You Must Know

Short-Term Insurance Explained

Long-term insurance generally means insuring the life of a person, and short-term insurance covers either the loss of a specific item or against a particular event over a period of time. Short-term insurance is simply flexible and can change as your circumstances change.

Personal Liability Cover Explained

This is insurance that covers a third-party suing you in your personal capacity for financial loss, injury, or death. These claims can be extended to legal costs, medical expenses, loss of income, pain, and suffering, and restoring damaged property. 

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Personal liability covers claims of between R2-million and R5-million and is normally integrated into your household, homeowner, and even your car insurance. Given that medical and legal costs can quickly add up to much more, you may benefit from a top-up option on your personal liability cover.

Premium Explained

This is the monthly payment to your insurance company for the assets covered. It usually increases on an annual basis. Your insurance company uses a number of procedures to determine your monthly premium based on the precautions you have taken to protect your possessions. Taking your car, for example, you can reduce your premiums by fitting a tracking device and alarm.

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Excess Explained

This is the amount not covered by your policy that you will have to pay towards the loss or damage to your property. The excess amount is usually stipulated in your contract, and your insurance company cannot change it without your knowledge. You can lower your excess by increasing your monthly premiums. 

Exclusions Explained

Your policy will include a list of conditions where the insurance company won't pay out for your damages or loss. For example, if you live in an area prone to flooding, then your insurance company may exclude paying for damage caused by a flood from your policy to minimize their risk.

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Protection as a consumer

The short-term insurance industry is governed by legalities. That is the Short-Term Insurance Act. The act prescribes exactly how the industry might operate. Also, if you make a claim and it is refused by your insurance company, you have recourse through short-term insurance.

This body will evaluate the dispute and make a finding. If the finding is in your favor, your insurance company is obliged to pay out your claim. Short-term insurance may seem like a tangle of red tape. By working with your insurance company and understanding all the ins and outs, you can come up with an option that suits your lifestyle, and needs and protects you from a devastating financial loss.