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Terminology

A Quick guide to insurance terminology


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Contents Insurance

This term usually forms part of a Household Contents policy and is used to describe the people who normally live with you, but it may be restricted to immediate family members or individuals who are financially dependent on you, including your domestic employees. Some insurers may limit the definition of household to certain persons actually living with you, such as immediate family members and domestic employees.

Example:

Your household contents policy covers the contents of your home. Your extended family comes to visit for a holiday and stays with you. Your home gets broken into, and some of your extended family member’s belongings are stolen. In that event, your extended family will not form part of your household, and therefore their claim will be excluded from a claim under your policy. They would have to make a claim under their own policy.




Commercial use insurance

Generally, this is where you use your property (vehicle or other equipment, etc.) for business purposes. Refer to your policy document to understand what your policy allows.




Comprehensive car insurance cover

This includes a range of covers available for a motor vehicle. Comprehensive cover covers you for damage or loss to your vehicle. It may also cover you for damage or loss caused to others through the use of your vehicle, for which you are held liable (responsible). Not all policies provide the same benefits.

Comprehensive policies are usually more expensive as they provide cover for more possible risks. This type of cover is often required by banks or financial institutions if a vehicle is financed under a credit agreement.




Consequential loss

This is loss not directly caused by the insured event but is an indirect result of the event. This is loss or damage that was not foreseen by the insurer or the policyholder at the time the policy was taken out. Consequential loss is in many instances not covered and cover is dependent on the risk that the policy covers.

Example:

Your geyser bursts, and your ceiling and carpets are damaged. This is normally covered by your homeowner’s policy. You may have to wait for the plumber to arrive and, as a result, miss a client appointment. This means you lose out on income, and this loss of income is a "consequential loss" of the geyser bursting. This is in most instances not covered unless specifically mentioned in your policy.




Credit Shortfall

This is a type of added insurance cover, generally referred to as "Top-up" cover, that covers the difference between the amount paid out by the insurer in the event of a total loss of a vehicle, and the amount owed to the bank or finance institution that financed the purchase of the vehicle under the credit agreement. This cover does not form part of comprehensive motor insurance cover, but it can be an optional extension to an existing policy or purchased as a separate policy at an extra premium. There may be limits to cover or certain amounts excluded from credit shortfall cover, such as arrears, certain finance charges and policy excesses.