Miss T Says: “Avoid Insurance Pitfalls”

Let’s face it, talking Insurance is not in everyone’s vocabulary. A lot of the legal phrases and terms are why you have a broker, right?

However, there are a few insurance terms that could mean the difference between “live” and “live”. Such simple words could mean the difference between being insured correctly to not at all.

Imagine the horror of discovering this too late!

By knowing and understanding some of the basic insurance terms when it comes to insuring your vehicle, you could avoid a claim from being declined.

We have compiled a list of the most commonly used terms and phrases used in Motor Insurance to help and guide you when going through your policy schedule and contract.

Policy Schedule:

A Policy Schedule is an outline of the cover provided under the policy, it will show details of the policyholder, what the policy does and the cover given and the relevant limits, sums insured and excess applicable.

Type of Motor Cover Available:

In Motor Insurance there are three ways in which to cover your vehicle.

  1. Comprehensive – if your vehicle is involved in an accident, stolen or set alight, it will be fully repaired or written off and the insurer will pay out the current market value (book value) of the car. The car will also be covered against accidental damage caused by yourself or another party.
  2. Third Party, Fire and Theft – covers any third party and their property in the event of an accident for which you are deemed liable, but it additionally includes insurance for your own car if it is stolen or damaged by fire. You would also be able to make a claim if your car was damaged in an attempted theft.
  3. Third Party Only – cover for only third party loss or damage. Third-party insurance is purchased by the insured (first party) from an insurance company (second party) for protection against another party’s claims (third party).

Sum Insured:

Shall be the maximum amount payable plus towing and delivery charges. This is not to exceed the reasonable market value (book value) of the vehicle.

Credit Shortfall:

Credit Shortfall is also known as Top up Insurance. Should your comprehensively insured vehicle be stolen/hi-jacked or written off in a motor accident or fire, this extension is aimed at settling the difference between the vehicle’s settlement value and the balance owed to the finance institution or bank.


The Excess is a policy condition requiring the insured to pay a portion of the loss. Usually this amount represents the first amount which is payable by the insured in respect of any one Claim with the insurer paying the balance over that amount up to Limit of Indemnity. The Excess can also be referred to as the ‘deductible’. An insurer may have many types of excesses that can apply in different situations or apply concurrently.

Variable excess:

By lending your car to someone under the age of 25 or who has not had a licence for more than 3 years, you may be liable for as much as triple the excess on your policy.

 Excess Waiver:

An extra amount you pay monthly which allows you to either pay no excess or a lower excess in the event of a claim.

Reasonable care:

The onus is on you to take reasonable care. Ensure that your car is roadworthy, check your tyres, and never leave your car unlocked or a spare key taped under the wheel hub. Insurance policies are only for accidental damage and not mechanical or electrical damage.

Also, never leave the car keys in the ignition as your claim will be repudiated.

Vehicle modifications:

Your cover is usually limited to factory specifications. By adding custom items such as mag wheels or a sound system, you are possibly increasing the risk of theft. Your insurer must be informed of any changes made.  All non-factory fitted accessories must be noted on the schedule for their individual values in order to have cover.

It is important to check whether or not changes you make to your vehicle are legal because when certain modifications are made to a vehicle after it has been homologated, it is not roadworthy unless it is checked and approved by the SABS.

Who is the claim paid to?

If there is a financial interest in the insured property by someone else (such as a Bank or your vehicle is registered in another person’s name), this must be disclosed up front. Claims may be settled with them instead of you or repudiated if you are not the owner and failed to declare such.