If you’ve come across words in your insurance policy and you’re not 100% sure what they mean, you’re not alone! Insurance terminology can sometimes sound like a different language. That’s why we’ve specifically designed this comprehensive glossary to help you better understand your cover and benefits.



An accident is an incident that is unintentional, unforeseen and sudden. It can result in anything from damage and loss to injury and death.

Accidental Injury

This is an injury that happens by accident – it is unintentional, unforeseen and sudden.

Additional Cover

This is extra cover that you can add to your policy, at an additional premium. It includes things like car hire or increased liability.

All Risks/Portable Possessions

Your jewellery, watch, smartphone and laptop are some examples of portable possessions – the things you pretty much don’t leave home without. Portable possessions are covered under an all risks policy and are divided into two types: unspecified and specified.

Unspecified: This section offers cover for lower-valued items. These things do not need to be individually specified but you do 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 offers cover for higher-valued items. These items need to 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. Possessions like cell phones, prescription glasses or bicycles must also be specified if you want them covered, regardless of their value.


Sometimes, in an accident, both parties are to blame. The degree of ‘blame’ is then split between the parties, to a max of 100%. An example of this is when both parties are equally to blame, then there is 50% - 50% apportionment. The percentage of responsibility placed on each party can be different and the cost of the damages is split according to this percentage. The payment, and who receives it, is based on the calculated difference after the apportionment percentage has been applied to each party’s damages.


Arson is the deliberate act of starting a fire, with the intention to cause harm to people and/or their property. 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 (not to mention the legal implications could be very severe for that individual).


When your car, home or buildings are damaged due an insured peril, we will send an assessor to check the extent of the damage. He/she will put together a report for us and recommend how the claim should be handled based on their assessment.


This term is used together with the terms underinsurance and settlement – because if you’re underinsured, the average rule will apply and a settlement amount is what you’ll receive. Look at this example of how the average rule works and the terms you need to know:

Imagine you have a house that’s insured under your buildings policy for R1 million. This is known as the sum insured. Let’s say that a huge flash flood hits, the entire house is damaged and the cost to entirely rebuild it is R1.5 million. This is known as the value at risk. Now let’s look at a different scenario – the flood destroys part of the house and the cost of repairs is R500 000. This is known as the loss. To calculate the settlement amount, the average calculation would be applied. Here’s how it works:

Sum insured            /   value at risk      x loss            = settlement

R1 million                /     R1.5 million    x R500 000    = R333 333

Amount not covered                                                    = R166 000                                

Now think about this instance: you’ve insured the valuables in your home for R100 000 – the sum insured. All your valuables are swept away in the flash flood. The cost to replace them is R200 000 – the value at risk. In another scenario, there may be partial damage to your home contents. For example, a tree falls onto a part of the house, causing 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.

NB: Ensure that you update your sum insured regularly to avoid paying the amount not covered out of your own pocket.


Betterment occurs when we need 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 put in a better position than you were before the claim. For example, a tyre that has substantial mileage on it has to be replaced with a brand new one. Thus, we will deduct the amount, which we had to pay to place you in the better position, from your claim amount.


A broker is a person or business that acts as the middleman between you and your insurer. When using a broker, you allow them to make decisions about your insurance policy and manage it for you. They give you advice on which cover to choose out and assist you with claiming. It’s important to remember that brokers charge for their services and earn commission from the insurers they represent.

Buildings Insurance

A buildings insurance policy provides cover for the actual structure of your home and other buildings (example: domestic quarters, garages etc.). If the structures and/or its fixtures (excluding geysers) are damaged or destroyed, this would be covered under a buildings insurance policy. Specific terms and conditions apply, so check your policy book to see exactly what you’re covered for.


A burglary occurs when someone gains illegal access to your property, through force or violence, with the intention of stealing from you and/or causing damage.

Changes in risk

This is one of the most critical terms to remember when it comes to your insurance policy. It’s extremely important that you update us on changes that may affect your risk – this could be anything from moving home to changing where you park your car overnight.

If you’re unsure whether a change will affect your risk, get in touch with us to find out. It’s always better to be safe than sorry as non-disclosure of certain information could affect your insurance policy and any claims you may have.


An insurance claim is basically a request to us to either pay you out, replace or repair an insured item. Whether we pay out, repair or replace is at our discretion.

Claim Finalisation

This refers to the outcome of a claim – whether it is rejected or settled and how it will be done like repairing the item, replacing it or giving you cash to buy another one.

Commencement Date

This refers to the date and time your insurance cover starts. E.g. if your insurance policy commences on 1 March 2020 at 12:00 and you have an accident after that, you will have cover – as long as you stick to all the terms and conditions of your insurance policy.


Commission it the payment made by insurers to brokers and representatives for selling insurance policies for them. Commission also covers ongoing intermediary service that the intermediary provides to the client, such as varying or renewing a policy. The amount is regulated and is usually displayed on your policy schedule as a percentage of your premium.


This pays for loss or damage that you have suffered or for which you are legally liable.

Comprehensive Vehicle Cover

You are covered for just about any eventuality with Comprehensive Vehicle Cover. It includes cover for theft, loss, accidental damage to your car, as well as cover for third-party and fire damage.

Resultant damage

If your insured vehicle is damaged due to a hijacking, this extra loss or damage that happens as a direct result of an insured peril is called resultant damage.

Consequential loss

Any loss or damage not directly caused by an insured peril but arising as a result of such damage. Amongst other things, this includes compensation for inconvenience, interest, money you lose 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

This is a legal agreement between you and us. 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 policy schedule, terms and conditions and any telephonic conversations all form part of the insurance contract.


The literal definition of cover is to ‘protect or provide shelter for something’. This is similar to what insurance provides. While insurance cannot stop events from happening, it helps you to recover financially by replacing or repairing your lost or damaged items, provided it is 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 good example is a life policy. This 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 paying the beneficiaries of the policy.


A declaration is statement that provides true and complete information and doesn’t exclude or misrepresent any material facts. The declarations you make form the basis of your insurance contract. If these are not true or misleading, we may cancel your insurance policy or reject your claim. That’s why it’s so important to be upfront and honest with your insurer.


Insurers mayrefuse to take on a certain risk, enter into an insurance contract or cancel an existing insurance contract. When this happens, the request for insurance or continuation of insurance is declined.  There are various factors that can influence this decision including your previous claims history. 


To disclose something means that you make information known whereas non-disclosure refers to the opposite – keeping information secret. It’s your duty to disclose all information that could be relevant to your insurer accepting your risk. For example, 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 need to inform your insurer.


This is an additional condition or restriction on your insurance policy. For example, you may have an endorsement on your home contents policy stating that you’ll only be covered for burglary and theft if a burglar alarm is activated when you’re not at home.


When you claim, there is usually a portion of the claim that isn’t covered by insurance. This is what we call the excess. An excess could be either a fixed amount or a percentage of the claim amount. (If you’re unsure about the excesses that apply to your cover, get in touch with us and we’ll be happy to help.)

There are four different types of excesses:

  1. Basic Excess – theminimum, first amount that you need to pay towards your claim. 
  2. Additional Excess –paid in addition to the basic excess and is based on specific risks. For example, 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 – you canchoose to increase your excess to lower your premium.
  4. Cumulative Excess – the sum of additional excesses, if they are all for the same claim. 


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

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

Specific exclusions: These are events that we won’t cover. They only apply to specific insured items or cover types. For example, 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 vehicle’s keys and/or ignition keys of your vehicle in or on the vehicle.

Ex Gratia Payment

This is when we make a payment as an expression of goodwill. In other words, we are not liable under your policy to pay for your loss but do so to maintain a good relationship with you. Ex gratia payments cannot be regarded as a binding standard which will be followed by the insurer in the future.

Good Faith

Good faith is so important in maintaining a good relationship between you and your insurer and it applies to both of you. When entering into an insurance contract, both the insured and the insurer do so in good faith. From our side, this means not misleading you or confusing you with any policy terms and conditions. From your side, this means disclosing all necessary information and not misrepresenting any facts that could be relevant to us accepting your risk.


This is a condition that could create or increase the chance of a loss from an insured peril.

When we consider your risk and decide whether to insure you or not, or for how much, we consider these important factors:

  • A physical hazard – an example of this is a home without burglar bars.
  • A moral hazard – this is harder to recognise as it relates to the integrity of the insured.

Home Contents

A good way to look at this is to imagine turning your house upside down – your home contents are all the items that would fall out. Items must be insured for their current replacement value, not what you may have paid for them when you bought them. Also remember that you can’t choose which items you’d like 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.


Any person (over the age of 15) who lives with you at your insured address (excluding tenants and domestic workers) are considered household members.

Household Member

Any person (over the age of 15) who lives with you at your insured address (excluding tenants and domestic workers) are considered household members.

Insurable Interest

In order to insure something, you need to have an insurable interest in it, meaning that youbenefit financially from its protection, or you could suffer financially if it was lost or damaged. Generally, insurable interest is based on ownership or legal possession.


In essence, this is an arrangement between you, the insured, and us, the insurance company. We offer you indemnity or compensation for liability, damage, or loss from insured perils.

Insurance Company/Insurer

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

(The) Insured

If you take out an insurance policy with us, you’re the insured.

Insured Peril

Insured perils are events that are unexpected or accidental and include events like fire, theft or flooding. These are specific risks or causes of damage or loss that are covered by insurance.


If you don’t pay your insurance premium on time, your policy 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 a second deduction. (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

Our risk based on two factors:

1. The probability of damage or loss occurring:  This is all about 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 is about the money that will be lost and the terms high and low are used to describe this. For example, a car worth R500 000 is much more expensive to repair or replace than one worth R130 000. So, the first car is a high risk while the second is a low risk.

Liability Insurance

This is also referred to as third-party insurance and provides cover for a third party if you’re held legally liable for their death or injury, or for damage to their property. There are two types of liability insurance:

  1. Personal liability: This relates to 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 relates to businesses and provides 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. To put it plainly, a member of the public is holding the business responsible for the injury.


Loss includes loss of or damage to property, and third-party injury or death. There are four categories of loss:

  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 can hold you liable for either of these, and order you to compensate the third party accordingly. You’d suffer a loss because you’d have to pay money to clear yourself of this liability.

Own Damage Losses

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 number of insured perils, which are defined in your insurance policy.

Sentimental Losses

A loss that insurance cannot pay for because the value of the item is sentimental and not financial. A scrapbook or photo album is an example of this.

Loss Adjuster

We may send a loss adjuster to your home to assess the damage or loss that you’re claiming for. They will ask questions to clarify the facts of the claim, provide a summary of this validation and a recommendation to the insurer who will make the final decision.

Malicious Damage

This is the act of deliberately causing damage to your property.

Material Fact

This is anything that will influence our decision to insure you or not, and if so, what terms and conditions apply. This will include things like excesses and policy exclusions.

Material Misrepresentation

When taking out an insurance policy, we ask a lot of questions. We do this to fully understand your risk and needs. If you’re not honest when answering these questions, and don’t share the information we need to know before accepting your risk, this is known as material misrepresentation.

No-claim Bonus (NCB)

This is a nice one! If you haven’t claimed for a certain number of years (usually between one and five), you could qualify for an NCB. This means you could get a discount on your premium. There are certain criteria for receiving this bonus, like having had comprehensive insurance, without interruption, for a set period.

Ombudsman for Insurance

If you disagree with a decision made by us, like we rejected your claim, you can approach the relevant Insurance Ombudsman - 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 following an accident, you will be covered by Personal Accident Insurance.


This is the contract between you and us, regarding the cover you’ve chosen, and the terms and conditions that apply.

Policy Schedule

This is a personalised document that lists details like your cover, premium, deduction dates, excesses, and endorsements, and all other relevant details. Every time you make a change to your policy, like a changed address or an added vehicle, your policy schedule will be updated.


The person who takes out a policy is the policyholder and is not always the same person as the insured. For example, you could take out insurance for your child’s car, making them the insured and you the policyholder.

Policyholder Protection Rules

The Financial Sector Conduct Authority imposes these rules on insurers to ensure that we treat our policyholders fairly.


The monthly deduction that goes off your account every month, for your insurance, is your premium.

Proof of Ownership

This is important when it comes to claiming for something like an item of jewellery stolen in a burglary. We may ask to see an invoice or a valuation certificate with your details on it. This shows that you did, in fact, own the item. This is done to avoid fraudulent claims.

Proof of Quantum

This is displayed on a document like an invoice or a valuation certificate and shows the value or cost of the insured item.

Pro Rata

Pro rata refers to a part of something. In the insurance world, it’s usually used in reference to premiums. For example, 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 bit of the month (10 days instead of the full 30).


This is an estimated premium for your cover and may change depending on the type and amount of information you give us.

Regular Driver

This is the person who drives an insured car the most and is listed on your policy schedule. You can have more than one regular driver per car. Always make sure that the regular driver/s are listed on your policy schedule.


Even insurance companies need insurance. Think about the impact of claims following a wide-spread flash flood. Thousands of customers will be claiming simultaneously, for large amounts. In this case we may need the help of our reinsurance company to cover the unexpected high cost of these claims.


If you’ve cancelled your insurance with us and decide you want to take out the same policy again, we will reinstate it.


Every year we review your policy, during the month when your policy commenced. This is usually when premiums are adjusted based on various factors like the country’s economic situation, changes in your risk profile and your claims in the previous year. We always send you a letter and an updated policy schedule at renewal stage.


There are numerous factors that influence our decision to reject a claim. One such factor could be due to the insured not sticking to 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. For example, if you’ve made lots of claims in the past or had lots of interruptions in cover, you could be considered a bad risk, whereas, if you have a good claims history and have had continuous cover for many years, you would be considered a good risk.

Visible Forcible Entry or Exit

If someone breaks into your car or home and you claim, your insurer may want to see signs of forced entry or exit as a condition of paying your claim. A sign of forced entry or exit 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. Because of this, 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 is saved from a fire, storm, theft, or accident in either a damaged or a partially damaged state is called salvage. An example of this would be 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

This is the amount that you insure your property for and 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. Follow them.

Third Party

A third party is someone involved in a claim who is neither the insured nor the insurer. For example, if you drive into someone, the person in the other car is the third party.

Third-Party Only Insurance

This is the most cost-effective cover and allows you to claim for the damage you caused to other parties' property. You will not be covered for the theft of your car and for any damages to your car with this type of cover.

Third Party, Fire, and Theft Insurance

As the name suggests, this insurance provides cover if you’re in an accident and a third party is injured or their property, in this case their car, is damaged as a result. 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. An example would be if you took out buildings cover of R1 million for your home but the cost to rebuild your home is R2 million. This means you’d be underinsured by

R1 million. The principle of average will be applied to calculate the amount the insurer will pay.


An underwriter is the company that decides to accept a specific risk at a specific premium. This company appoints 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 whether or not to accept the risk, how much cover to provide and what premium to charge.


The process of gathering information from a potential customer to decide whether or not to accept the risk of insuring them and what premium to charge, is called underwriting.

Valuation Certificate

This is a document that states 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

When you have vehicle insurance, you are covered for various insured perils such as accidental damage, theft and third-party cover. The insured perils you’re covered for will depend on what vehicle insurance you have. You have three options; comprehensive, third-party, fire and theft, or third-party only.

Wear and Tear

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

Write-off/Total Loss

If you are in an accident and your vehicle is damaged beyond repair or the repairs would cost more than the value of the vehicle, an insurer will write-off the vehicle.

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