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We know, insurance can sometimes get a little complicated.

That’s why we’ve put together this comprehensive glossary of important insurance terms.

From the types of cover you get and the different stages of a claim to even the types of risks we cover – the definitions are all here for your ease of reference.

You can rely on us to make sure your insurance experience is clear and uncomplicated.



Accident refers to an instance that is unintentional, unforeseen and sudden, which results in anything from damage and loss to injury and death.

Accidental Injury

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

Additional Cover

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

All Risks/Portable Possessions

Think of anything that you wear or keep on your person – your jewellery, watch, smartphone and laptop are some examples. These are what insurers call portable possessions and are covered under an all risks policy. There are two types of portable possessions: unspecified and specified.

Unspecified: This section provides cover for lower-valued items. These items do not need to be individually specified; however, you would 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 provides 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. Items like cell phones, prescription glasses or bicycles must also be specified if you want them covered, regardless of their value. 


This happens when the parties involved in an accident are both to blame. The degree of ‘blame’ is then split between the parties, to a maximum of 100%. For example: When both parties are equally to blame, there is 50% - 50% apportionment. The percentage of responsibility placed on each party can vary 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.  


When someone sets fire to a property, and that act is deliberate, it’s arson and is considered a serious crime. Arson is generally not covered by insurance, but you’ll need to check the terms and conditions that apply to your insurance policy. For example, 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. The legal ramifications could also be severe for that individual.


If you’re in an accident and your car is damaged, your insurer will send an assessor to do an inspection. He/she will carefully check and quantify the damage to put together a report for the insurer. Assessors will also be sent out to assess home contents and buildings claims.


You’ll usually hear this term used together with the terms underinsurance and settlement. That’s because, if you’re underinsured, the average rule will apply and a settlement amount is what you’ll get. Here’s a simple example of how the average rule works and the terms you need to know:

Consider this scenario: you have a house and you’ve insured it for R200 000. This is known as the sum insured. Now imagine that your entire house is swept away in a flood and the cost to rebuild it is R300 000. This is known as the value at risk. Now consider another scenario – a storm blows a tree down. It falls onto a part of the house, causing R60 000 worth of damage. This is known as the loss. To calculate the settlement amount, the average calculation would be applied. It works like this:


Sum insured            /  value at risk      x loss            = settlement

R200 000                /     R300 000           x R60 000    = R40 000

Amount not covered                                                    = R20 000                                

This R20 000 is probably not a cost you were prepared for. To avoid this potential unexpected payment, update your sum insured regularly.

Now consider another scenario: you’ve insured the valuables in your home for R100 000 – the sum insured. Now imagine that all your valuables are swept away in the flood too. 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 also not a cost you were prepared for. To avoid this potential unexpected payment, update your sum insured regularly.


This is when an insurer has to replace an item that has wear and tear on it with a brand-new item. Because wear and tear is not an insured peril, you are placed 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, the insurer will deduct the amount, which they had to pay to place you in the better position, from your claim amount.


An insurance broker is an intermediary who acts as the middleman between a client and an insurer. You can use the services of an intermediary to sell, solicit or negotiate insurance on behalf of a client for compensation. They can make decisions on your behalf. They will conclude a needs analysis and then can give you advice on which cover to take out. They can assist you with the claims process too. Intermediaries can charge an advice fee, for additional services, which must be justified.

Buildings Insurance

If the physical structure of your home, other buildings or fixtures on your property are damaged or destroyed, this would be covered under a buildings insurance policy. Specific terms and conditions apply, and you’ll need to know exactly what you’re covered for. Always check with your insurer to make sure.


Burglary is when someone gains illegal access to your property through forceful or violent means with the intention of causing loss or damage. 

Changes in risk

Moving to a new house or changing where you park are both examples of a ‘change’. These may affect your risk and it’s your responsibility to tell your insurer about these changes.

If you don’t know whether a change will affect your risk, ask your insurer. It’s always better to make sure – non-disclosure of certain information could jeopardise your insurance policy and any claims you may have.


An insurance claim is a formal request to your insurer to indemnify you for the loss of, or damage to, an insured item. 

Claim Finalisation

This is when a claim has been settled or rejected – and if it is settled, how will it be done e.g. repair, replacement or cash-in-lieu

Commencement Date

This is the date and time your insurance cover begins. For example, if your insurance policy commences on 1 February at 12:00 and you have an accident after that date and time, you will be covered.  You must, however, adhere to all the terms and conditions of your insurance policy to enjoy full cover.

This is the date and time your insurance cover begins. For example, if your insurance policy commences on 1 February at 12:00 and you have an accident after that date and time, you will be covered.  You must, however, adhere to all the terms and conditions of your insurance policy to enjoy full cover.


This is the payment by insurers to intermediaries for selling insurance policies on their behalf. Commission also covers ongoing intermediary service that the intermediary provides to the client, such as varying or renewing a policy. The amount paid is regulated and reflects on the policy schedule as it forms a percentage of the premium.


This means to pay for loss or damage that you have suffered or for which you are legally liable

Comprehensive Vehicle Cover

This covers more potential perils than any other vehicle cover, which is why we’ve called it ‘comprehensive’. With this cover you’ll be able to claim if your vehicle:

  • is damaged or written-off in an accident;
  • is stolen;
  • or if you have caused damage to another party’s (third party) property

Resultant Damage and Consequential Loss

Resultant damage

This is any additional loss or damage that happens as a direct result of an insured peril (for example, damage caused to the insured vehicle as the result of a hijacking).

Consequential loss

Any loss or damage not directly caused by an insured peril but arising as a result of such damage. This includes, amongst other things, 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

An insurance contract is a legal agreement between you and your insurer, which determines the claims which the insurer is legally required to pay. In exchange for payment, known as the premium, the insurer promises to pay for loss caused by perils covered under the policy wording. The insurance contract consists of the policy schedule, terms and conditions and any telephonic conversations.


The word ‘cover’ is defined as the act of ‘protecting or providing shelter for something’ - and this is essentially what insurance does. While insurance cannot stop events from happening, it helps you to recover from them by replacing or repairing your lost or damaged items provided it is as 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. An example is a life policy, which 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, prior to the beneficiaries of the policy.


This is a statement that should provide true and complete information, and which does not exclude or misrepresent any material facts. The declarations you make form the basis of your insurance contract. If these declarations are false or misleading, an insurer may cancel your insurance policy or reject your claim.


This is when an insurer refuses to take on a certain risk or to enter into an insurance contract. An insurer may also decide to cancel an existing insurance contract. There could be various reasons for this, like the fact that that they don’t underwrite that particular risk or because of an individual’s claims history. It is important that you disclose any previously declined insurance to a new insurer.  


Disclosure refers to making information known and non-disclosure refers to the opposite – keeping information secret. It’s an individual’s duty to disclose all information that could be relevant to that individual’s insurer accepting their 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 were found guilty of dishonesty or fraud previously, you need to inform your insurer.


An endorsement is a condition or restriction added to an insurance policy. For example, an endorsement may be added to a home contents policy to say that you’ll only be covered for burglary and theft, provided a burglar alarm is activated whenever your home is left unoccupied. 


If you have a claim, there is a portion of the claim amount that is not covered by insurance. This is known as the excess and needs to be paid by you. An excess could be either a fixed amount or a percentage of the claim amount, depending on your insurer.

There are four different kinds of excesses:

1.       Basic Excess

This is the minimum, first amount that you have to pay towards your claim. 

2.       Additional Excess

This is an excess that must be paid in addition to the basic excess and is based on specific risk criteria. 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

This is an additional excess you choose to pay in exchange for a decreased premium.

4.      Cumulative Excess

This is the sum of additional excesses, if they are all for the same claim. 


All policies have exclusions, which can be general or specific, and are not covered by your insurance policy.

General exclusions: These are events that are not covered by the insurer, no matter what cover is selected or which risk items they have insured. An example is an act of war.

Specific exclusions: These are events that will not be covered by the insurer and 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 a discretionary payment made to you by the insurer as an expression of goodwill when there is no legal obligation to pay the claim in terms of the policy. This payment is made without your insurer admitting any liability (responsibility) under the policy. Ex gratia payments cannot be regarded as a binding standard which will be followed by the insurer in the future.

Good Faith

This is critical to a good relationship between you and your insurer and applies to both of you. When entering into an insurance contract, both the insured and the insurer do so in good faith. From the insurer’s side, this means not misleading the insured or obfuscating any policy terms and conditions. From the insured’s side, this means disclosing all necessary information and not misrepresenting any facts that could be relevant to the insurer accepting your risk.


A hazard is a condition that may create or increase the chance of a loss resulting from an insured peril.

When an underwriter considers your risk to decide whether to insure you or not, or for how much, he/she considers two basic factors:

1. A physical hazard that affects the chance of loss, such as a home without burglar bars.

2. A moral hazard, which is more difficult to recognise as it relates to the integrity of the insured.

Home Contents

These are all the things that you could take with you if you were moving to a new house. Items must be insured for their current replacement value, not what you may have paid at the time of purchase.  Also remember that you can’t select just certain items 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.


Also known as burglary, housebreaking is forcible entry into premises with the intention of committing a crime.

Household Member

This is any person (over the age of 15) who lives with you, the insured, at your residential address - excluding tenants and domestic workers.


Insurable Interest

In order to insure something, you need to have an insurable interest in it. This means 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.


This is an arrangement between you, the insured, and an insurance company, in which the insurance company offers you indemnity or compensation for liability, damage, or loss resulting from insured perils.

Insurance Company/Insurer

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

(The) Insured

This is the person, group or organisation that is covered by an insurance policy.

Insured Peril

An insured peril is a specific risk or cause of damage or loss that is covered by an insurance policy. Insured perils are instances that are unexpected or accidental, like fire, theft, or flooding.


A policy lapse may occur when your insurance premium is not paid on time. 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

Insurers establish risk based on two factors:

1. The probability of damage or loss occurring:  This refers to 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. Thus, 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 refers to the monetary value of a loss, and the terms high and low are also 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, naturally, the first car is a high risk while the second is a low risk.

Liability Insurance

Also known as third-party insurance, liability insurance provides indemnity or compensation to a third party if you’re held legally liable for the death or injury of a third party, or for damage to his/her property. There are two types of liability insurance:

  1. Personal liability: This is for 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 is for businesses that sell products or provide services to the public and provides indemnity or 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. In other words, a member of the public is holding the business responsible for the injury.


Loss describes the loss of or damage to property as well as the injury or death of a third party. 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 may hold you liable for either of the above and order you to compensate the third party for the damage, injury or death. You would suffer a loss because you’d have to pay money to clear yourself of this liability.


Own Damage Losses

This refers to the 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

This refers to a loss that insurance cannot pay for because the value of the item is sentimental and not financial. Sentimental damage, like breach of promise to marry, can’t be insured.

Loss Adjuster

A loss adjuster is a person who is employed by an insurer to validate a claim. A loss adjuster may be sent to your home after a claim is made to assess the damage or loss that you’re claiming for and ask questions to clarify the facts of the claim. They will the provide a summary of this validation and a recommendation to the insurer who will make the final decision.

Malicious Damage

When a person deliberately causes damage to the rights or property of another person, this is known as malicious damage.

Material Fact

A material fact is anything that will influence an insurer’s decision to insure you or not, and if they decide to insure you, what terms and conditions they’ll apply, like excesses and policy exclusions.

Material Misrepresentation

When taking out an insurance policy, you’ll be asked a number of questions. This is so that the insurer can fully understand the risk they’re taking on by insuring you. If you’re not entirely honest when answering these questions, and don’t share the information the insurer would need to know before accepting your risk, this is known as material misrepresentation.

No-claim Bonus (NCB)

If you haven’t claimed from insurance for a certain number of years (usually between one and five), you may qualify for an NCB. This could result in a discount on your insurance premium. There are certain criteria for receiving this bonus, e.g., having had comprehensive insurance, without interruption, for a set period.

Ombudsman for Insurance

If you disagree with a decision made by your insurer, e.g., they 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

This type of insurance provides cover if you are injured, disabled or pass away as the result of an accident.


This is the contract between the insured and the insurer regarding the cover taken out by the insured, and the terms and conditions that apply.

Policy Schedule

A policy schedule is the document that lists all the policyholder’s cover, their premium, deduction dates, excesses, and endorsements, as well as declarations made by the policyholder (where relevant).


If you take out an insurance policy in your name, you are the policyholder. The policyholder is not always the same person as the insured. For example, you could take out an insurance policy for your child’s car. In this case, you would be the policyholder and your child would be the insured.

Policyholder Protection Rules

These are rules, set down by the Financial Sector Conduct Authority, which insurers have to follow when it comes to dealing fairly with policyholders.


This is the amount you pay your insurer for the cover they provide - usually paid monthly and is based on your individual risk profile.

Proof of Ownership

Sometimes, when claiming for items that are insured, the insurer will ask you for proof of ownership for that item. This would be something like an invoice or a valuation certificate with your details on it. This proves that you did, in fact, own the item and are not claiming for something that never existed.

Proof of Quantum

This refers to the value or cost of the insured item you’re claiming for. This value can be proven with a document like an invoice or a valuation certificate.

Pro Rata

Pro rata refers to a portion of something and, in insurance, 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 portion of the month (10 days instead of the full 30).


A quote is an estimated premium for an insurance policy and may change depending on the type of information that you give an insurer during underwriting.

Regular Driver

A regular driver is the person who drives an insured vehicle more frequently than any other person, and whose name is on the policy schedule for the vehicle. If your regular driver/s aren’t shown on your policy schedule, contact your insurer to add them.


This is insurance for insurance companies and ensures that they are covered in the event of having to pay out an unexpected number of expensive claims. For example, a storm hits large parts of the country and causes huge damage and loss. As a result, thousands of customers claim at the same time - the insurance company may need assistance from their reinsurer to cover these claim costs.


This is when an insurance policy is restarted after it has been cancelled.


Insurance policies are usually renewed each year in the anniversary month that the policy commenced. This is usually when premiums are increased or decreased based on various factors like the economic situation in the country, changes in your risk profile and your claims history.


This is when an insurer does not pay a claim. This could be due to a number of factors, e.g., the insured did not honour 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. However, 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 your car or home is broken into, 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. 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.



Salvage is the property that can be saved from a fire, storm, theft or accident in either a damaged or a partially damaged state. E.g., 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.

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

With this cover, you will be able to claim for the damage you caused to other parties' property. While it is the most cost-effective cover, it is important to remember that you won’t be covered for the theft of your car and for any damages to your car.

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. It also covers your vehicle for fire damage or if it’s stolen. It does not, however, cover any accident damage caused to your vehicle.


You are underinsured when the value of cover you have chosen for your property does not cover the full value of a claim. For example, you took out buildings cover of R1 million for your home but the cost to rebuild your home is R2 million. In this example, 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.



Underwriting is 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. 

Valuation Certificate

This is a document that states the value of certain high-value items like jewellery or antiques and 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

Vehicle insurance provides cover for various insured perils, including accidental damage, theft, and third party cover. The insured perils you’re covered for will depend on what vehicle insurance you have, i.e., comprehensive, third party, fire, and theft or third party only.

Wear and Tear

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

Write-off/Total Loss

If a vehicle is damaged beyond repair – or if repairing it would cost more than the value of the vehicle - an insurer will write-off the vehicle.