Special thanks to Lizette Strauss, Broker Relationship Manager at MUA Insurance Acceptances (Pty) Ltd., for her insights in the creation of this blog article!

In life there are always risks, and in the event that you experience loss or damage to your well-earned possessions, insurance can be a help. It can help greatly with the financial burden of fixing or replacing your possessions, and avoid worse repercussions to your quality of life, livelihood and your pocket.

Having insurance is a good start, but understanding how best to use it can be a whole other ball game. Understanding your insurance terms and small print is important, but we don’t always have the time to do so. Additionally, the time and effort that it can take to submit a claim is often offputting for people – not to mention the perceived complexities which leads to confusion and frustration. Added to this, not all insurance products are made equal and it’s important to know you are covered sufficiently for your needs.

This blog article explores this and offers some tips, applying mostly to short-term insurance. It covers questions like; what are premiums, when to claim, how to claim, what happens when I claim, and how to get the most of your insurance. 

Disclaimer: this blog article is intended to offer general insights into the topic and should not be taken as official financial advice. Not all insurers offer the same cover or have the same exclusions – therefore, before making any decisions regarding your insurance policies, it is recommended that you consult with a professional.

Before we get into the article, let’s unpack: 

What is the difference between short-term insurance and long-term insurance?

• Long-term insurance refers to insurance related to people and life-changing events. A good example of this is life insurance. 
• Short-term insurance is usually renewed every year and is specifically aimed at covering possessions like your car and home. Examples of this are; car insurance, travel insurance,  home insurance. 

What is an insurance Premium?

An insurance premium is the amount you pay to keep your insurance policy active, which is usually paid on a monthly basis to your insurer. The amount differs from person to person, depending on their credit profile and certain factors relating to the possession being insured. 

It can be calculated based on the following and can fluctuate over time; 

• Have you had insurance before? 
• How often you claim
  • Loss ratio and claims frequency may cause an increase in premiums. Some insurers will immediately increase the premium, while others may do so at renewal.
  • If a client claims for every single incident and for smaller amounts on a regular basis, the insurer may cancel the policy completely. 
• In the case of car insurance – where is the car parked overnight? (garage or on street)
• In the case of home insurance – does it have a thatched roof?
• Other factors like exposure to extreme weather. 

What WON’T be covered by my insurance?

It is important to note that your short-term insurance won’t necessarily cover everything. So how your possessions might come to be damaged or lost is a contributing factor on whether you can receive a pay-out from your insurer to help cover the loss. There could be exclusions in your short-term insurance policy that you’re not even aware of. 

Knowledge is power! Consider that you might not be covered for the below: 

• If an item fails while still under their manufacturer’s guarantee and/or warranty.
• Any medical expenses and/ or business of a medical scheme.
• In the event of loss or damage while doing changes to the structure of your building or extending, altering, renovating, constructing, cleaning, restoring or repairing. 
• Car tyres damaged by potholes.
• If your domestic appliance is damaged by rodents. 
• Damage to your possessions as a result of scheduled Loadshedding – read more on this topic in our past article here. 

These exclusions differ on a case-by-case basis, read your policies carefully or involve a professional like TVC Wealth and Health Managers for the best chance of preventing misunderstandings when filing claims.

Do you understand the fine print on your insurance?

To claim or not to claim?

It is a common myth that it’s your right to claim for every single thing if you pay a premium on your short-term insurance. It is important to understand how insurance companies work; they’re not there to give handouts and will increase your premiums if you claim too regularly. In other words, the more the “pool” is depleted = the higher the premiums you’ll pay.

In certain scenarios, it’s probably financially smarter to handle losses out-of-pocket to help save money in the long run. Some insurance companies even offer no claims bonuses.

For instance, it is not recommended to claim for the following;

• Any damage caused by wear and tear (age).
• Claiming for every small item, may result in compulsory excesses, which will not be to the client’s benefit if really large incidents happen.
• When the cause is a specific exclusion on the policy. Each time you try to claim it will be noted on your insurer’s system.

When you do decide to claim it is important to submit your claim timeously, normally within 30 days after the incident. It is beneficial to include as much information as possible, such as photos of the accident scene / burst pipe / storm damage, as this may assist with how the claim will be handled. Remember, a rejected claim could have a negative impact on your profile.

What do they mean by ‘excess’?

The insurance excess is an amount that you pay yourself towards the overall cost when you make a claim. For example, if you claim for a damaged laptop and the claim is approved, an insurer will likely not pay out the full value of the laptop fix, but you will need to contribute in some way financially to the fixing of the laptop. (Note: you will also need to use a technician who is approved by your insurer.) 

An excess is not an insured amount that you’re entitled to be refunded for. For example, it is a common myth that you’ll get your excess back in the case of a Third-Party claim – this is simply not true. 

Get the most bang for your buck 

Since most high net worth policies are Assets All Risk based policies, the sums insured for the automatic extensions are usually set by the insurer and cannot be influenced or reduced. However, it helps to regularly review and update your insurance policies to ensure you’re not paying more than you should. Changes in personal circumstances or asset values may also mean that you’re no longer covered, when you think you are! 

You should complete an inventory of possessions at least once a year as prices increase. Ideally, insurance is about putting you in the same position that you were in before an insurable incident happened. This will prevent that average from being applied and help you avoid having to carry a portion of the costs yourself. 

It’s natural for your insurance premiums to fluctuate from time to time – for example, if more possessions are added to a household, the contents sum insured will  go up. In the case of any home  renovations (which includes installing inverters or solar panels) you’ll need to let your insurer know to get cover approved for it – ditto if the value of the building increases because of these changes.  

People can make a lot of mistakes when it comes to short-term insurance, which can have devastating consequences. For example, a common mistake is not having the correct person insured as the main driver on a vehicle, resulting in a rejected claim! 

Don’t be a statistic, ensure you understand your insurance policy and the claiming process, so you can make it work in the best way for you, and experience its true benefits. 

Small print still got you flustered? Contact TVC Wealth and Health Managers today, and let us handle all your insurance needs!