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Short-Term Insurance – Why It’s A Must!

The future is uncertain. This is why short-term insurance is vitally important. It allows you to replace indispensable valuables. It protects you from the inability to honour your liabilities in unforeseen, unfortunate circumstances.  It means you can honour your responsibilities in the worst of scenarios.

It protects you from enduring loss. It does this by allowing you to have the resources to replace your most vital possessions.

How does short-term insurance differ from long-term insurance?

There are two broad categories of insurance in South Africa. They are long-term insurance and short-term insurance. Both long-term and short-term insurance products are in place for scenarios we all hope will not happen. Interestingly, long-term and short-term insurance products are not really about timeframes.

In short, long-term insurance covers lifespans and persons. Life insurance, for example, pays out in the event of death. It can also cover specific disabilities or other conditions that make working impossible.

Short-term insurance covers belongings and objects. For example, these are the products that are needed in the horrible event of car being stolen. It is these products that need to be in place if your property is ever robbed and your possessions stolen.

There are four most common forms of short-term insurance products: vehicle insurance, personal liability insurance, household insurance and homeowner’s property insurance.

This brief article will consider the first two, and we will cover the next two in a future article.

Motor Vehicle Insurance

Most of the motor vehicles on South African roads are uninsured. Up to about 12 million vehicles – 70% on the road – might not have insurance. This means that if you are involved in a car accident with them, they do not have the means to pay for repairs.

Motor vehicle insurance is a must for any car owner.

There are three basic types of motor vehicle insurance.

Comprehensive cover

If your car is still financed, this type of cover is compulsory. As the name implies, it covers the vehicle most comprehensively.

Damages to your own car if you are in an accident are taken care of. Should a fire ever destroy or damage your car, this insurance will come into play. In the terrible event of a hijacking or theft, you will want your car to be insured. This is not always automatically covered in full. Ask us about the options to make sure that you know the ins and outs of your policy.

Comprehensive insurance also covers any third-party claims. Any damages to other cars caused by your vehicle will be covered with third-party insurance.

Comprehensive cover is recommended even for vehicles that are fully paid for. It gives an owner the greatest peace of mind knowing that whatever situation might arise, everyone involved is covered. It does come at the highest financial price. But the sense of knowing that all the above situations would be covered is well worth it. Considering the numbers of cars not insured on our roads, this is definitely worth having.

Third party, fire and theft

In an accident caused by you, the cover will only apply to the other party involved in the accident. They can claim against your insurance. This cover means that your own vehicle is not covered for damages in an accident. You would be liable for replacing or repairing your own vehicle from your own pocket.

If your car is damaged or destroyed by fire, or if your car is stolen or hijacked, the insurance cover will make provision for repairs or replacement of the vehicle.

The benefit of third party, fire and theft insurance is the reduced cost. It does also mean you can pay for the other party’s damages from the policy. But your own car is left at risk.

Third party cover

This is the most affordable option. It only covers for other vehicles as detailed above.

It must be noted that typical wear and tear on a vehicle is not covered by insurance.

Personal Liability Insurance

There are many unthinkable circumstances that, unfortunately, occur every day. Around South Africa, and the world, terrible things do happen all the time.

Personal liability insurance is definitely a valuable thing to have, even though you hope you will never have to use it. It comes into play if you are ever held responsible for financial loss or physical injury. The worst place to be in is if you are deemed to have caused someone’s death, even through accidental circumstances.

None of these are situations anyone wants to consider. But personal liability insurance covers you should you ever need to take responsibility for the unthinkable.

For example, if a person is injured on your property, they need to prove your culpability. If they succeed and then sue you, personal liability insurance assured that you will be covered. The loss of income, medical bills, and legal costs will be settled by the policy. Another typical component is the repair, replacement and/or restoration of damaged property. This would all be in the context of being tied to the incident. The injured party’s pain and suffering is also in view in a personal liability claim.

This is all dependent on the amount of cover that you have. We can certainly advise you on the extent to which your circumstances determine what amount you should be covered for.

This cover also comes into play if a stolen credit card of yours runs up a large debt on your bank account. If you were ever sued for wrongful arrest as, for example, a member of a neighbourhood watch, you would want this liability cover in place.

Typically, personal liability cover forms part of other products. Motor vehicle insurance and household cover have personal liability policies linked to them. Many come with a top-up option. We will be able to guide you through the process of choosing the best cover for your needs.

Does my insurance work internationally?

This varies from policy to policy and product to product. Our consultants can help you to confirm what your current policies offer and assist you to find the policy that will best suit your needs. We can also help advise on the processes to make sure that you comply with your insurers when travelling abroad, either in Africa or overseas.

Do not just cancel your insurance

 As we have seen, insurance is there when you need it most. Many people are uninsured, leaving them very vulnerable to the worst that can happen in life.

The financial strain that we have seen in the last 18 months has left many struggling to pay their insurance bills. A lot of people have made the decision to simply cancel their policies.

This is unwise. Insurance is what you need when you least expect it.

Rather than simply cancelling your policies, rather take stock. Assess what you are most exposed to and ensure that you have insurance in case the need arises.

Morebo will give you expert advice

 Everyone’s needs are different. We all have specific requirements that mean that insurance is not a one-size-fits-all approach.

Our expert consultants are there to help with taking stock of your insurance needs. We can assess what you have covered yourself for and advise on how best to suit your needs within the parameters of your budget.

Call us today to get the best input for the best value for the best peace of mind.


– Article by Liam Doyle 


Bibliography/Further Reading:

Short-Term Insurance

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Morebo Financial Solutions (Pty) Ltd, an affiliate of Liberty, the Liberty Group Ltd is an authorised Financial Services Provider in terms of the FAIS Act. (No. 2409)
Morebo Wealth (Pty) Ltd, an affiliate of Liberty, the Liberty Group Ltd is an authorised Financial Services Provider in terms of the FAIS Act (no. 2409)
Morebo Brokerage (Pty) Ltd is an Authorised Financial Services Provider in terms of the FAIS Act (no. 48360)

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