Short Term Insurance

Short term insurance is the most subscribed type of insurance available. It is available to cover so many contingencies that a complete overview would require a long list, but the most common types are typically household insurance, health insurance and vehicle insurance. In effect, short term insurance refers to any type of insurance that isn't life insurance.

The most basic form of insurance is simply a contract between a client and an insurance company, whereby the client pays a fixed monthly sum, known as a premium, in return for which the insurance company undertakes to replace any of the items covered by the insurance company should they be lost, stolen or damaged. Premiums are calculated according to the payout value of the goods that are insured, and typically the client gets to specify this value.

When it comes to claiming and payouts of short term insurance, there are two ways to set values. There is replacement value and market value. Taking out insurance at market value means that the client will be recompensed to the value of the sum that the insured article would have fetched in the market at the time of loss. Insurance at replacement value means that the insurance company will pay out whatever it will cost to actually replace the item that has been lost. It is clearly better to insure at replacement value, to avoid what is known as an insurance shortfall. This occurs when the amount paid out is not enough to allow the client to replace the item. Of course, in return for this higher payout, the monthly premium is usually higher for insurance set at replacement value.

You can take out short-term insurance on your house, your cars and other vehicles, household items, jewellery, your business and its assets, amongst many other things. There is also a form of short term insurance that covers you against loss of income, be it in terms of losing revenue for your business, or being retrenched and thus unable to pay your bills. The latter is known as income protection. You can in fact even take out insurance against not being able to pay your insurance premiums!

Companies other than traditional insurers have also started offering various types of short term insurance. For example, a company that issues you with a credit card will now routinely offer you low-premium insurance cover against being able to pay off your monthly card installments.

South African Short Term Insurance Companies