2.6 Compensation
In short-term insurance personal accident and liability are examples of compensation policies. In the event of a loss the insured is paid an agreed amount of money. This differs from indemnity policies, where insured items are restored, repaired or replaced or the monetary value thereof is paid.
2.5 Indemnity
Indemnity is when a person’s financial position is restored, as a result of insurance, back to what it was immediately before the person experienced a loss. Indemnity and insurable interest are closely linked, as the principle of indemnity means that the insured cannot recover any amount exceeding the extent of his insurable interest.
2.4 Duty of Disclosure
Disclosure means to make known, reveal or expose to view, all of the information that the client needs to know about the financial product and the terms and conditions of the product he is purchasing. The obligation to disclose begins as soon as the negotiation for the insurance contract begins. The client must be in […]
2.3 Insurable Risk
Risk is the subject matter of an insurance contract; the possibility of a loss against which insurance is taken out. In order for a risk to be insured, there are certain basic requirements that must be met. These requirements are as follows: The cause of the loss must be accidental or fortuitous. There must be […]
2.2 Insurable Interest
Insurable interest is the legally recognised financial relationship between the insured and the financial loss that he suffers following a loss. One can insure only those things with which one has a legally recognised financial relationship, for example, one can insure one’s house against fire because if it burns down one will suffer a financial […]
2.1 Introduction FSTI
Before one can begin to determine the insurance needs of a client, there are some basic insurance principles that need to be understood. These principles are considered in the subsections following.
1.10 The Short-Term Insurance Act
In South Africa, insurance companies must comply with the Short -Term Insurance Act No. 53 of 1998. This lays down various regulations, which insurers must comply with specifically. The Short-Term Insurance Act contains the legislated requirements of rules and regulations that govern the short-term industry. The Short-Term Insurance and Long-Term Insurance Acts ensure that insurers […]
1.9 Short-Term Insurance Products Explained
In short term insurance, the products are the actual types of policy documents that are provided by the insurers to cover the client’s property or to otherwise safeguard his assets or interests. In the same way that ordinary retail products are sold to meet a specific need of a customer, so short-term insurance products are […]
1.8 Standard Term of a Short-Term Insurance Policy
The standard duration for Short term insurance contracts are normally one year and are then reviewed by insurers. The contract can then be renewed or declined, or terms and conditions altered. Personal lines and small retail policies can be issued for a monthly period and a monthly premium. In many of the cases the onus […]
1.7 Terminology Relevant to Short-Term Insurance
The following terminology is relevant to short-term insurance: Agent: A person who acts on behalf of another and in the case of insurance is the intermediary between the proposer and the insurer. Asset: A person who acts on behalf of another and in the case of insurance is the intermediary between the proposer and the […]