If you pay short term insurance premiums, you want to get the best value for your money and protect yourself against nasty surprises when you need to make a claim. By taking out short term insurance, you undertake to fulfil certain requirements in exchange for insurance cover. If you do not fulfil these requirements, you may not be able to claim for damages against your insurance policy.
When you apply for insurance, the insurance company or broker must give you the following information:
- Proof that they are licensed under the FAIS Act;
- Policy details: contact details of the insurer, exactly what is covered and excluded, amount of your premium, whether your premium increases automatically every year or not, how to claim; and
- Inform you that if you pay your premiums late, you will still be insured as long as you pay the outstanding premiums within 15 days. If you pay after the 15th day, you will have no insurance cover.
Make sure you give accurate information. If it’s not accurate, it is false information, even if you thought it was the correct information.
Make sure you play open cards. If you are not sure whether the insurer needs certain information, ask them. By keeping quiet, you also give inaccurate and false information.
After the application
Motor vehicle insurance is only valid if your vehicle is roadworthy. The responsibility rests on you to check your insured vehicle regularly to ensure that it stays roadworthy e.g. make sure there is enough tread on the tyres as required by law. Also, remember to contact your insurer at least once a year to reduce the insured value of your vehicle as motor vehicles’ value normally decline over time. By reducing the insured value, you will save on premiums and avoid being over-insured.
Household content insurance covers everything inside your house. House contents are normally insured at replacement value. As the price of furniture, clothing, etc. increases over time, you need to contact your insurer periodically to adjust the replacement value of your home’s contents to prevent becoming under-insured.
All risks insurance covers movable items that are taken out of the house e.g. cell phones. Most policies have a claim limit up to which movable items don’t have to be specified in your insurance policy. Any claim for an item with a value above the limit will only be considered if the item was specified by informing your insurer about any identifiable details of the item which can help to identify that item e.g. the brand, colour or serial number.
To enjoy maximum protection under your short term insurance policy, you need to do three things. Firstly, pay your premiums on time. Secondly, maintain insured assets as agreed with the insurer. Lastly, periodically assess whether the insured value of assets covered by your insurance policy, is still reasonable. If there are material changes in the replacement value of any of these assets, instruct your insurer to adjust the insured value of such assets. If you do these three things, you can have the peace of mind that you have maximum protection under your short term insurance policy.
Accessed on 18 September 2015:
SAIA Consumer Education Booklet written by Denis Beckitt
This article is a general information sheet and should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors & omissions excepted. (E&OE).