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A Quick guide to insurance terminology

Period of insurance ("POI")

This is the period for which you have cover, beginning with the start date and ending with the expiry date of the policy, as stated in your policy, and for which premium has been received by the insurer.

Permanently unfit for use

Property is permanently unfit for use when it has structural damage that would be impossible or unsafe to repair.


This is the amount of money you will pay to an insurer or its authorised representative in return for the insurance benefits (cover) set out in the policy. Premiums are paid at agreed regular intervals, usually monthly or annually.

Pro rata premium

This is a portion of the full premium that you must pay if you are only covered for a certain period from the time that the cover starts on the policy.


On a monthly policy, if you only require cover from 20 April, you will be charged a pro rata premium which is equal to 10 days from 20 April to 30 April. Thereafter you will pay the full monthly premium.

Proximate cause

This is a direct cause of a loss that has not been interrupted by any other event. The insurer will only be liable to cover you for insured events that directly cause the loss or damage.

Example 1:

A person who has a personal accident insurance policy goes horseback riding, falls off, breaks his leg (i.e., has an accident) and cannot move and during the night he dies of exposure. This incident is covered, because the accident was the direct cause of the fact that he died.

If the same incident occurs and the injured person is taken to the hospital but contracts chicken pox while there and dies of chicken pox, such an event is not covered, because the accident did not directly cause his death – the illness did.

Example 2:

A shopkeeper insures his shop windows against loss or damage from any cause except fire.

A fire breaks out at a neighbouring store, and a mob of people gathers at the scene. The mob starts to riot, and the shopkeeper’s windows are broken by the mob. The damage to the windows was caused by rioting and not fire, and therefore the insurer will pay the claim.