Like many others around the world, South Africa’s insurance industry has its fair of rules, terms and jargon. Fortunately, there plenty of sources on the internet to answer these kinds of questions. Organizations, like the South Africa Insurance Association for example, exist to answer various insurance-related questions and, at the same time, provide support to anyone who wants to buy a policy from a South African insurance company.
So if you don’t know anything about insurance in South Africa, and you don’t know where to start looking for
information then following FAQ will help you get up to speed.
1. How Do I Know If An Insurance Company is Legitimate or Not?
The best way to determine the legitimacy of a particular South African insurance company is to visit the Financial Service Board’s website: www.fsb.co.za. Not only does the FSB list members of the SAIA (South African Insurance Association), they also provide a certain amount of assurance to people who are looking to buy their first insurance policy.
If you cannot find the information you’re looking for on their site then you can always contact them via email for the information that you require. The FSB, like many regulatory bodies offer consumers the information they need in order to make informed decisions.
Aside from the FSB, another option that you can try is to visit the SAIA website and see if the insurance company you’re interested in is one of their members. Legitimacy generally comes with SAIA membership, which is why you should only do business with companies that belong to this association.
2. What Do I Do If I Want to File A Complaint Against An Insurance Company?
Assuming that your insurance company is a member of the SAIA and recognized by the FSB then here’s what you should do in order to file a complaint:
1. Read the SAIA Code of Conduct. The SAIA can only assist with complaints which violate the rules listed here.
2. Go to the SAIA (SAIA.co.za) website.
3. Complete the SAIA complaints forms and send it them. They respond to your complaint and perform the necessary steps to look into the matter.
Aside from the SAIA, you can also contact someone at the FSB, and for complaints in regards to short term insurance, you can always visit the Ombudsman for Short-Term Insurance or the OSTI.
3. What is A Pro Rata Premium?
A Pro Rata Premium refers to a type of premium which is based on the amount of time in which the insurer was at a position of risk. Pro Rata is often used to describe certain days within the month before the payment of premiums begin.
For example, let’s say that your coverage begins on the 20th day of March and the monthly premium for the policy is R300. Given these factors, the Pro Rata Premium for March is calculated in this way: R300 divided by 31 days multiplied by 11 (remaining days of March from the 20th). Therefore, the Pro Rata Premium for March is R106.45.
4. What Does Under-Insured Mean?
Under-insurance refers to a situation where the amount for which your property is insured is less than its replacement value. What this is means is that when loss or damage were to happen, there will be two insurers, namely the insured (who will act as his or her own insurer) and the insurance company.
For example, let’s say that the property has a value of R20,000, but the sum insured is only R15,000. What this means is that the difference will have to be covered by the insurer herself.
5. What is PLIP?
PLIP refers to extended Personal Legal Liability. It covers you for things like loss or damages due to accidents, financial losses resulting from incorrect or misleading financial advice, libel suits, gradual pollution, disturbance suits and wrongful imprisonment.
Furthermore, PLIP also cover liabilities that result from the possession of illegal firearms as well as liabilities that result from animal attacks under your care. In addition to these benefits, PLIP also covers family members who live with you as well as domestic workers who regularly operate in your property.
PLIP costs R10 to R15 per month for a coverage of R10,000,000 and R20,000,000 respectively. Finally, it’s worth mentioning that once you have paid your first premium, you will immediately get full coverage.
6. What Does Indemnity Mean?
In the South African Insurance Sector, Indemnity refers to the act of restoring the insured person in his or her original financial position prior to the loss. So if you receive full indemnity then you won’t have to pay for anything. On the other hand, if you are under insured then you will have to pay the remaining amount out of your own pocket.
7. What Does Insured Mean?
When you encounter the term “insured” it basically refers to the legal entity or natural person who is named as the Policyholder in the policy contract. The Insured, therefore, is the party who is entitled to compensation, provided they have insurable interests in the insured property.
8. What Does Proximate Cause Mean?
Proximate Cause refers to direct cause of a contingency or loss. What this basically means is that the insurer will only be held liable if the Proximate cause was an insured peril.
9. What is Cyber Insurance?
In South Africa, Cyber insurance or E-Insurance is a type of insurance which are designed to address legal liabilities and first party losses which results from computer or internet related causes. Cyber insurance is used for such cases, as unauthorized access by hackers, proliferation of viruses and business to business exposures.
10. What is a Jurisdiction Clause?
A Jurisdiction Clause is a type of clause in a liability policy which determines which court will have the jurisdiction to hear and decide on the particular law suit. Take note also that in South Africa, Liability policies often restrict jurisdiction to RSA courts.
11. What Does “Contractual Duty to Minimize Loss” Mean?
In many insurance contracts, the insured are obligated to take all possible steps to reduce losses. What this basically means is that you should take all the necessary steps to prevent or minimise losses. Failure to do so may considered as a breach of contract.