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Consumers often breathe a sigh of relief once they have purchased their household contents or new motor vehicle insurance cover. The premium being affordable, they enter into the agreement without taking the time to familiarise themselves with the content of the contract.

It is for just this reason that the insurance ombudsman is forced to mediate on thousands of disputed insurance claims each year, many of which could have been avoided had the purchaser taken the time to read their policy terms and conditions. 67% of complaints registered with the ombudsman in 2007 relate to motor vehicle claims, 12% to homeowners insurance and 11% to miscellaneous cover issues. “The reasons for claim disputes vary,” says Arnold van der Linde, chief executive officer at the IntegriSure Insurance Group of companies, an authorised financial services provider offering specialised short-term insurance and other products for niche markets, “but they’re mainly attributable to the insured not fully understanding what his or her policy actually covers.”

Although short-term insurance contract wordings are comprehensive and explain issues relating to the cover being purchased, as well as any associated clauses and definitions, it is advisable that the purchaser makes every effort to fully understand the content, with special attention being given to wordings such as:

• Exclusions – some insurance companies exclude hale damage to vehicles
• Policy conditions – familiarise yourself with the insured amount on your policy (how much will the insurer pay out in the event of a claim, how many claims will be paid, etc.)
• Definitions – familiarise yourself with these (power outages, for instance, do not form part of the insured peril definition)
• Restrictions of use – in the case of motor vehicle insurance, for example, one must stipulate whether your vehicle is being used for private or business purposes
• Security/maintenance – understand exactly what security or maintenance measures need to be in place in terms of your home and motor vehicle (failure to do so may result in a claim being repudiated)
• Liability – what protection does your insurance policy offer in terms of, for instance, passengers in your vehicle or persons on your property
• Excesses (First Amount Payable) – determine whether any deductibles, such as excess payments, are applicable as the sum you are insured for may not necessarily be the sum that is paid out
• Car hire – find out whether this is standard on your policy as it may only be applicable in the event of theft or write-off

Fully understanding what is and what is not covered in your short-term insurance contract is vital in terms of ensuring that one is adequately covered in the event of a mishap. For example, a motor vehicle parked on the curb with a ‘for sale’ sign in the window may not be covered against theft under these circumstances and collector item coins will need to be specified in the policy as they do not fall under the scope of basic household contents cover.

“Although insurance intermediaries make every effort to fully explain short-term insurance policy terms and conditions to purchasers, it is in the insured’s best interest to personally ensure that he or she is clear on the policy’s scope of cover,’ concludes Van der Linde.