Insurance terms, explained simply
Confused by insurance jargon? Here are the South African insurance terms that matter, in plain language.
Excess
Your excess (or deductible) is the fixed amount you agree to pay towards each claim. The insurer covers the rest. A higher excess usually means a lower monthly premium, and vice versa.
No-claim bonus
A no-claim bonus rewards you for going a period without claiming. Depending on the insurer it may take the form of a reduced premium, a cash-back amount, or a discount that grows the longer you stay claim-free.
Comprehensive cover
Comprehensive cover is the most complete car insurance. It pays for accident damage to your own vehicle, theft, fire and natural disasters, as well as damage you cause to others. It is usually required for financed cars.
Third-party insurance
Third-party insurance only pays for loss or damage you cause to someone else's vehicle or property. It does not cover your own car. It is the cheapest type of cover and suits older, low-value vehicles.
Market value
Market value is the estimated amount your car would sell for at the time of a claim, taking depreciation, mileage and condition into account. Many insurers pay out at market value if your car is written off.
Retail value
Retail value is roughly what a dealer would sell your car for. It is usually higher than market value. Some insurers let you insure at retail value for a higher premium.
Write-off
A write-off (or total loss) is when a vehicle is damaged beyond economical repair, or stolen and not recovered. The insurer pays out the insured value rather than repairing the car.
Underinsurance
Underinsurance happens when the sum insured is lower than the true value of what you're covering. At claim time the insurer may reduce the payout in proportion, leaving you short.
SASRIA
SASRIA (the South African Special Risks Insurance Association) provides cover for damage caused by special risks such as riots, strikes, public disorder and civil commotion — events that standard policies typically exclude.
Telematics
Telematics uses a device or smartphone app to monitor how you drive — speed, braking and distance. Insurers use this data to reward safer driving with lower premiums or cash-back.
Betterment
Betterment is a contribution you may pay when a repair replaces a worn part with a new one, leaving your car in better condition than before the claim. The insurer covers the rest.
Voluntary excess
A voluntary excess is an amount you agree to pay towards a claim on top of the basic excess, in exchange for a lower monthly premium. The higher the voluntary excess, the lower the premium — but you must be able to afford it at claim time.
Basic excess
The basic (or compulsory) excess is the standard amount the insurer sets that you pay towards most claims before they pay the rest. It applies on top of any additional or voluntary excesses.
First amount payable
'First amount payable' is the insurer's formal term for your excess — the portion of a claim you pay yourself before the insurer covers the balance.
Sum insured
The sum insured is the value you insure an item or property for, and the most the insurer will pay for a total loss. Setting it too low leads to under-insurance and reduced payouts.
Insured value
The insured value is the amount your car is covered for, usually set to retail or market value. It's the basis for a theft or write-off payout, minus your excess.
Assessor
An assessor (or loss adjuster) inspects the damage on a claim, confirms the cause and cost, and reports to the insurer so the claim can be settled fairly.
Broker
An insurance broker is an intermediary who gives advice and arranges cover on your behalf, often across several insurers. Brokers earn commission and can help with claims.
Immobiliser
An immobiliser is an electronic security device that stops a vehicle being started without the correct key or fob, reducing theft risk. Insurers often require or reward one.
Tracking device
A tracking device lets a recovery service locate and recover a stolen or hijacked vehicle. Given South Africa's theft rates, many insurers require an approved tracker on higher-risk cars.
Perils
Perils are the specific risks or events a policy insures against — such as fire, theft, storm or accident. 'Insured perils' are those covered; anything else is excluded.
Exclusion
An exclusion is a risk, item or circumstance the policy specifically does not cover, such as wear and tear, driving under the influence, or an undeclared use.
Endorsement
An endorsement is an amendment or special condition added to your policy — for example a security requirement, an added driver, or an excluded item. It forms part of your cover terms.
Average (under-insurance)
'Average' is the clause insurers apply when you're under-insured: they reduce your payout in the same proportion that you under-insured. Insuring for full replacement value avoids it.
Indemnity
Indemnity is the principle that insurance puts you back in the financial position you were in before the loss — no better, no worse. It underlies how claims are settled.
Liability
Liability is your legal responsibility for damage or injury you cause to others. Third-party liability cover pays those costs, which can far exceed your own vehicle's value.
Salvage
Salvage is what's left of an insured item after a total loss, such as a written-off car. Once the insurer pays out, the salvage usually becomes theirs to sell.
Schedule
The policy schedule is the personalised document that sets out exactly what you're covered for — items, sums insured, excesses, drivers and conditions. Always check it matches your needs.
Policyholder
The policyholder is the person (or entity) in whose name the policy is taken out and who is responsible for the premiums and for meeting the policy conditions.
Waiting period
A waiting period is the time after a policy starts during which you can't claim for certain events. It's common on funeral and pet cover, and sometimes specific car or home perils.
Grace period
A grace period is a short window after a missed premium during which your cover continues and you can still pay to keep the policy active. Miss it, and cover can lapse.
Renewal
Renewal is when your policy continues for another term, usually a year, often with an adjusted premium and updated sums insured. It's the ideal time to review and compare cover.
Rider
A rider (or add-on) is optional cover you attach to a policy for an extra premium — such as car hire, windscreen or accessory cover on a motor policy.
Third-party, fire and theft
Third-party, fire and theft covers damage you cause to others, plus fire and theft of your own vehicle — but not accidental damage to your own car. It sits between comprehensive and third-party only.
All-risk cover
All-risk (portable possessions) cover protects items you carry with you — phones, laptops, jewellery — against loss, theft and accidental damage, anywhere, not just at home.
Public liability
Public liability cover pays for injury or damage you cause to other people or their property, for which you're legally liable. It's often part of a home policy.
FSP
An FSP (Financial Services Provider) is a business licensed and regulated to give financial advice or sell financial products in South Africa. Insurers and brokers are FSPs; comparison sites usually are not.
Ombud
The National Financial Ombud settles complaints between consumers and financial institutions, including insurers, fairly and free of charge, when internal complaints fail.
POPIA
POPIA (the Protection of Personal Information Act) governs how businesses collect, use and share your personal information in South Africa, requiring your consent and safeguards.
Proximate cause
Proximate cause is the dominant, effective cause of a loss — the event that sets off the chain leading to the damage. Insurers use it to decide whether a claim is covered.
Cash in lieu
Cash in lieu is when an insurer pays you the cash value of a claim instead of repairing or replacing the item themselves. Terms and amounts vary by insurer.
Reinstatement
Reinstatement is restoring your sum insured to its full level after a claim (some policies reduce it by the amount paid), so you're fully covered again — sometimes for an extra premium.
Depreciation
Depreciation is the reduction in an item's value as it ages and wears. It affects market-value payouts and is why 'new-for-old' replacement cover can be more valuable.
Vehicle finance settlement
On a financed car that's written off or stolen, the insurance payout usually settles the outstanding finance first. If the payout is less than you owe, you face a shortfall.
Credit shortfall
Credit shortfall is the difference between your car's insured value and the amount still owed on its finance. Optional shortfall cover pays this gap after a write-off or theft.
Windscreen cover
Windscreen (or glass) cover pays for a chipped or cracked windscreen and other glass, usually with a reduced excess and often without affecting your no-claim bonus.
Uninsured
Being uninsured means having no insurance in place. Driving uninsured is legal in South Africa but financially risky, since you'd pay all costs — including third-party claims — yourself.
Loss adjuster
A loss adjuster investigates and assesses larger or complex claims on behalf of the insurer, confirming the cause, extent and value of the loss before settlement.
Insurable interest
Insurable interest means you'd suffer a financial loss if the insured item were damaged or lost — a requirement for valid cover. You must have it in the car, home or item you insure.
Named driver
A named driver is anyone you list on your policy as a regular driver of the car. The main (regular) driver must be listed correctly, or a claim can be rejected.
Fronting
Fronting is dishonestly listing a lower-risk person as the main driver of a car mainly driven by someone higher-risk, to cut the premium. It can void a claim.
Total loss
A total loss (or write-off) is when a vehicle is stolen and not recovered, or too badly damaged to repair economically. The insurer pays out the insured value instead of repairing.
Actuary
An actuary is a qualified professional who applies mathematics and statistics to assess risk and help insurers set fair, sustainable premiums. Their models weigh factors like claims history, age and location to work out how likely and how costly claims are.
Underwriting
Underwriting is how an insurer evaluates a risk and decides whether to offer cover, on what terms, and at what premium. It considers the item insured, the applicant's history and the likelihood of a claim.
Proposal form
A proposal form is the application document where you give the insurer the information it needs to assess your risk — details about you, the item insured and your history. Answering fully and honestly is essential, as errors can affect a claim.
Material information
Material information is any fact that would influence an insurer's decision to offer cover or set the premium. You have a duty to disclose it accurately; non-disclosure of material facts can void a claim or the policy.
Non-disclosure
Non-disclosure is when a policyholder does not reveal a material fact the insurer needed to assess the risk. Whether deliberate or accidental, it can lead to a claim being reduced or rejected and the policy cancelled.
Pro-rata refund
A pro-rata refund returns the portion of premium covering the time left on a policy you cancel mid-term, calculated in proportion to the days remaining. Some cancellation fees or short-period rates may apply.
Cooling-off period
A cooling-off period is a set number of days after taking out a policy during which you can cancel it and get your premium back, provided you have not claimed. It gives consumers a chance to reconsider a new purchase.
Excess waiver
An excess waiver is an optional benefit, sometimes offered for an extra premium, that reduces or removes the amount you would otherwise pay towards a claim. It lowers your out-of-pocket cost when you claim.
Agreed value
Agreed value cover fixes the amount the insurer will pay for a total loss when you take out the policy, rather than using market or retail value at claim time. It is often used for classic, collectible or specialist vehicles.
Loading
A loading is an additional charge added to your base premium to reflect a higher-than-standard risk, such as a poor claims history, a high-risk area or a young driver.
Sub-limit
A sub-limit is a maximum the insurer will pay for a particular item or type of loss, set below the overall sum insured. Common on jewellery, electronics and cash within contents cover.
Specified items
Specified items are valuables you list individually on your policy — with descriptions and values — so they are covered for their full worth rather than a capped sub-limit. Often required for jewellery, cameras and bicycles.
Roadside assistance
Roadside assistance is a benefit that sends help if your vehicle breaks down or you are stranded — jump-starts, tyre changes, fuel delivery, locksmith help or towing. It is included in many comprehensive policies or offered as an add-on.
Claims history
Your claims history is the record of claims you have made across insurers over time. A clean history typically means lower premiums and a no-claim bonus, while frequent claims can raise your premium.
Blacklisting
In insurance, 'blacklisting' loosely refers to being recorded as a high-risk customer — for example after multiple claims, fraud, or a policy cancelled for non-payment — which can make cover harder or more expensive to obtain.
Third-party
A third party is any person other than you (the first party) and your insurer (the second party). Third-party liability cover pays for damage or injury you cause to these other people or their property.
Peril
A peril is an event that can cause loss or damage — such as fire, theft, storm, flood or accident. Policies list the perils they cover; a 'named perils' policy covers only those stated, while wider cover includes more.
Collision cover
Collision cover pays to repair or replace your own vehicle after an accident involving another vehicle or object, regardless of who was at fault. In South Africa this is part of comprehensive car insurance rather than a standalone product, and is subject to your excess.
Know the lingo? Now compare cover
Get a free, no-obligation car or home insurance quote and put your knowledge to work.
Get a Quote Now