Glossary

Insurance words, in plain words

Insurance has a habit of explaining jargon with more jargon. Every definition here is written for somebody who has never bought a policy, and says what the term means for you rather than what it means to an underwriter.

General

Excessalso called deductible: The first part of any claim, which you pay. If your excess is R5 000 and the repair costs R30 000, you pay R5 000 and the insurer pays the rest.; If a repair costs less than your excess, claiming achieves nothing. A high excess quietly removes small claims from your cover altogether.; Excess explained
FAIS: The Financial Advisory and Intermediary Services Act, which governs who may give financial advice in South Africa and how.
FSPalso called financial services provider: A business licensed by the Financial Sector Conduct Authority to give financial advice or provide intermediary services.; You can check whether any company is licensed, and for what, on the FSCA register. It is free and takes a minute.
No-claim bonus: A discount that builds up for each year you do not claim, and is usually lost when you do.; Worth weighing before lodging a very small claim, because the bonus you lose can exceed what you recover.
Policy schedule: The document listing what you specifically are covered for: your car, your sums insured, your excesses and your valuation basis.; This is the document that answers almost every question people phone about. Most have never read theirs.
Policy wording: The full terms of the contract, setting out what is covered, what is excluded and what you have to do.; It beats anything a salesperson said and anything on a comparison site, including ours. It is the document that decides a claim.
POPIA: The Protection of Personal Information Act, which governs how organisations may collect and use your personal information.; It gives you the right to see what a company holds about you, have it corrected, and have it deleted, at no cost.; Our privacy notice
Premium: What you pay every month to hold the policy.
Underwriting: How an insurer assesses your risk and decides whether to cover you, on what terms and at what price.
Voluntary excess: An extra amount you agree to carry yourself in exchange for a lower monthly premium.; It is a genuine lever on price, and the test is whether you could produce that amount within a week. An excess you cannot find in a hurry means you cannot start the claim.; Should I raise my excess?

Car

Comprehensive cover: Cover for damage to your own car as well as damage you cause to other people, including accident, theft, hijacking, fire and weather.; If your car is financed, your bank will require this and nothing less.; Car insurance explained
Credit shortfall coveralso called gap cover on a car, top-up cover: Cover for the difference between what your insurer pays for a written-off car and what you still owe the bank.; Early in a finance agreement the car loses value faster than the loan comes down, so the two numbers can be far apart. Not the same thing as medical gap cover.; Work out your shortfall
Market value: Roughly what a car changes hands for, sitting between retail and trade. The least standardised of the three.; Insurers define it differently. If your schedule says market value, ask in writing how they calculate it.
Regular driveralso called named driver: The person named on the policy as the one who mainly drives the car.; If the person who usually drives is not the person named, a claim can be declined. It is a common reason for one.
Retail value: What a dealer would sell your car for. The highest of the three valuation bases, because it includes the dealer's margin and warranty.; Retail, market or trade
Telematics: A device or app that scores how you actually drive, with the premium or rewards linked to that score.
Third party only: Cover for damage you cause to other people and their property, and nothing else. Your own car is not covered.; The cheapest option, and the reason people end up with no car after an accident that was their fault.
Third party, fire and theft: Cover for damage you cause to others, plus your own car being stolen or burnt. Crash damage to your own car is not covered.
Tracker: A device fitted to a vehicle that allows it to be located and recovered if stolen.; Sometimes a condition of your policy rather than an optional discount. If it was required and was not active, a theft claim can be turned down.; Trackers and insurance
Trade value: What a dealer would pay you for your car. The lowest of the three valuation bases.; A policy paying trade value on a financed car is where settlement shortfalls come from. Many people assume they are on retail and are not.; Retail, market or trade

Home

All risks: Cover for items you carry out of the house, such as a phone, laptop, handbag or bicycle.; Contents cover usually stops at the front door. Without all risks, a phone stolen at a shopping centre is not covered.
Buildings cover: Cover for the structure of your home: walls, roof, fixed fittings, usually the boundary wall and pool. It pays to rebuild.; Required by your bank if you have a bond, and often bundled into the bond account, which is why many people have this and no contents cover.
Contents cover: Cover for everything you would take with you if you moved: furniture, appliances, clothes, linen.
Sum insured: The maximum amount the insurer will pay out, which you choose when you take the policy.; Set it too low to save on the premium and you can have every claim reduced, not just the big ones.
Underinsurancealso called average clause: Insuring for less than it would cost to replace everything. If you are insured for half what you should be, the insurer can pay half of any claim.; The reduction applies to small claims too, which is the part that surprises people. This is the most expensive saving in insurance.; Home insurance explained

Life

Beneficiary: The person you name to receive the payout from a life or funeral policy.; The policy pays whoever is named on it, not whoever is in your will. If the two disagree, the policy wins.
Waiting period: A period at the start of a policy during which certain claims are not covered.; Common on funeral and life cover. Switching to a cheaper policy restarts the clock, which is the real risk in taking a better offer.

Claims

Betterment: Where a repair leaves you better off than before, for example a new part replacing a worn one. Insurers may ask you to contribute the difference.
Non-disclosure: Failing to tell the insurer something material when you took out the policy, such as a health condition or a previous claim.; The most common reason large life claims are declined. Insurers check records at claim stage, so declare everything at application, including things you think count against you.
Ombud: An independent office that resolves complaints between consumers and financial companies, free of charge.; You go to them after complaining to the company first. A meaningful share of complaints that reach the Ombud end with the customer getting something back.; How to complain
Salvage: The damaged vehicle itself after a write-off. The insurer normally takes ownership of it once it has paid you out.
Write-offalso called total loss: When repairing a vehicle would cost more than it is worth, so the insurer pays out its value instead of fixing it.

Something missing?

If you have run into a term that is not here, or one of these definitions did not actually help, tell us. A definition that needs reading twice is our problem, not yours.