We take out short term insurance for peace of mind. You pay your premiums regularly and feel safe because you know you are covered should any of your insured assets become damaged. But do you really have the insurance cover you think you have? Are you sure you will be able to claim if your assets should get damaged?
If you pay short term insurance premiums, you want to get the best value for your money and protect yourself against nasty surprises when you need to make a claim. By taking out short term insurance, you undertake to fulfil certain requirements in exchange for insurance cover. If you do not fulfil these requirements, you may not be able to claim for damages against your insurance policy.
When you apply for insurance, the insurance company or broker must give you the following information:
If you apply through a call centre, ask for the transcript of your phone call for your records.
Make sure you give accurate information. If it’s not accurate, it is false information, even if you thought it was the correct information.
Make sure you play open cards. If you are not sure whether the insurer needs certain information, ask them. By keeping quiet, you also give inaccurate and false information.
After the application
Motor vehicle insurance is only valid if your vehicle is roadworthy. The responsibility rests on you to check your insured vehicle regularly to ensure that it stays roadworthy e.g. make sure there is enough tread on the tyres as required by law. Also, remember to contact your insurer at least once a year to reduce the insured value of your vehicle as motor vehicles’ value normally decline over time. By reducing the insured value, you will save on premiums and avoid being over-insured.
Household content insurance covers everything inside your house. House contents are normally insured at replacement value. As the price of furniture, clothing, etc. increases over time, you need to contact your insurer periodically to adjust the replacement value of your home’s contents to prevent becoming under-insured.
Home owners insurance covers the physical structure (building) of your house. Property is normally insured at the rebuilding value of the structure. Take note that the rebuilding value of a property is usually lower than its market value. Any cost incurred to maintain the building’s structure is generally not covered by insurance. An insured property owner must do adequate maintenance on the property. If a property owner neglects to do the necessary maintenance and consequently suffers a loss, he/she will not be able to claim from the insurer for damage suffered as a result of inadequate maintenance. As most properties’ rebuilding value increase over time, you need to contact your insurer from time to time to increase the insured value of your house.
All risks insurance covers movable items that are taken out of the house e.g. cell phones. Most policies have a claim limit up to which movable items don’t have to be specified in your insurance policy. Any claim for an item with a value above the limit will only be considered if the item was specified by informing your insurer about any identifiable details of the item which can help to identify that item e.g. the brand, colour or serial number.
To enjoy maximum protection under your short term insurance policy, you need to do three things. Firstly, pay your premiums on time. Secondly, maintain insured assets as agreed with the insurer. Lastly, periodically assess whether the insured value of assets covered by your insurance policy, is still reasonable. If there are material changes in the replacement value of any of these assets, instruct your insurer to adjust the insured value of such assets. If you do these three things, you can have the peace of mind that you have maximum protection under your short term insurance policy.
Accessed on 18 September 2015:
This article is a general information sheet and should not be used or relied upon as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your financial adviser for specific and detailed advice. Errors and omissions excepted (E&OE)