Learner Study Guide
Demonstrate knowledge and
understanding of personal/domestic
insurance in South Africa
(Unit standard No 10369)
NAME:
ORGANISATION:
COURSE NO:
OR
RPL:
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Table of Contents
Page
Introduction
3
Specific Outcome 1
5
Specific Outcome 2
25
Specific Outcome 3
30
Specific Outcome 4
34
Specific Outcome 5
36
Glossary of terms
42
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Introduction
Welcome
Welcome to this learning intervention, which is aligned to unit
standard 10369 and deals with personal/domestic insurance
in South Africa.
This learning intervention can form part of a Level 4 Skills
Programme, which will enable you to meet the minimum
requirements of Column Four (Conditions/Restrictions) of the
Determination of Fit and Proper Requirements for Financial
Services Provider (2002), in order to be “fit and proper” in
terms of the Financial Advisory and Intermediary Services Act
37 of 2002.
Purpose of this
learning
intervention
This learning intervention will provide you with the knowledge
and skills required to:
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Learner’s roles
and
responsibilities
Explain the technical aspects of personal/domestic
insurance.
Calculate a rate based on the risk.
Investigate the structure of the short term
personal/domestic insurance market in South Africa
Explain the need for reinsurance in a short-term
personal/domestic insurance policy.
Demonstrate principles and practices of sound
interpersonal skills.
You are required to:
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Work through this self-study guide.
Take responsibility for your own learning.
Ask for guidance and support when required.
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Unit standard
The overall outcomes and specific outcomes of this learning
intervention are aligned with registered Unit Standard 10369.
This means that if you are able to demonstrate competence in
the learning outcomes, which are aligned to the specific
outcomes of the unit standard, you will qualify for credits,
which will contribute towards the 120 credits required for a
National Certificate at Level 4.
For further details regarding the process for obtaining the
National Certificate at Level 4, please contact your Human
Resources Department or the Skills Development Facilitator
within your organisation.
Assessment
In order to obtain the three credits for unit standard 10369,
you are required to work through this self-study guide and
provide evidence of your competence against the unit standard.
If you are unable to demonstrate competence, you will not
obtain any credits for the unit standard.
The assessment can be conducted at your workplace. A
qualified assessor or your line manager will conduct the
assessment and will provide you with the necessary information
about how the assessment will be conducted.
Enjoy
Now you may begin with the actual content of this learning
material. Everything of the best in your studies.
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1. Specific Outcome 1:
Explain the technical aspects
of short-term personal/domestic insurance
Assessment
criteria 1.1
The classes of short term personal/domestic insurance
covered in all policies are named with examples
Classes
Classes of personal/domestic insurance
Most personal lines insurance policies cover the following classes
of insurance:
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Homeowners (building)
Householders
All risks
Motor
Personal liability
Personal accident
Pleasure craft
Personal computers
Extended Liability
There is other specialist additional classes such as equestrian
cover, or travel cover that policies may extend to cover.
Homeowners Insurance will provide cover against specific
insured events/perils in respect of damage to the building
insured. The building in this case must be a private dwelling
house.
Buildings
The building itself is usually defined as:
“The private residence and its domestic outbuildings, landlords
fixtures and fittings, water, sewerage, gas, electricity and
telephone connections, paths and driveways constructed of
brick, concrete, pavers, asphalt or stone, walls, gates and
fences (excluding hedges), swimming pools, including filtration
plant, pool safety nets and covers, water pumping machinery
(not automatic pool cleaners). Tennis courts, sauna and spa
baths, belonging to the insured and situated at the risk specified
in the schedule”
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Contents
Householders insurance provides cover for loss or damage to
the contents of the private dwelling or its outbuildings and
damage must be as a result of an insured peril.
The cover for the contents usually extends to a residence
where the policyholder may be temporarily residing as well as
any furniture storage facility, provided that the insurers are
made aware of this and accept the change in risk.
The contents of the dwelling consisting of household goods
and personal effects, (including money and negotiable
instruments up to a limited amount) Business goods and
equipment are usually insured up to a limited amount.
All risks
All risks insurance provides cover for the insured including all
members of their family normally residing with them, for
items of personal effects, wearing apparel and items
specifically insured such as valuables.
The insurance cover provided is in respect of accidental loss or
damage, the items are insured whilst anywhere in the world.
Motor
The motor class of insurance usually covers private motor
vehicles, motorcycles, trailers and caravans owned hired or
leased by the insured person.
The motor vehicle may be insured for different classes of use,
which may include commercial use, or professional use.
The cover provided for motor vehicles is in respect of loss or
damage to the vehicle, there are three types of cover
available these are as follows:
 Third party only
 Third party fire and theft
 Comprehensive
The loss or damage under the third party fire and theft section
is restricted to losses arising from Fire, self-ignition, lightning,
explosion or theft or attempted theft and Third party liability.
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Personal
liability
The personal liability class of insurance provides cover to the
insured in respect of any legal liability to pay compensation
he/she may incur, in respect of accidental death, injury, illness
to persons or accidental damage to or loss of property, which
occurs during the period of insurance.
This cover does not extend to liability arising out of business
or employment.
Most insurers will include the cover as an integral part of the
Householders cover, however due to the increase in claims
falling under this class of insurance, insurers are offering an
extended liability cover, for which the insured will pay an
additional premium, this cover is far wider than the standard
personal liability cover and will cover amount up to R20 000
000 and above and includes liabilities such as motor etc.
Extended
liability
The personal accident class of insurance provides the insured
with cover in respect of bodily injury caused by accidental
external and visible means. The insured may take the policy
out to protect themselves or any member of their family for
whom they have an insurable interest. The person’s insured
would be named on the policy schedule.
Personal
accident
The cover provided is usually in respect of death, permanent
disability, temporary total disability and medical expenses.
There are many exceptions to this policy such as dangerous
sports like professional rugby, motorcycling etc.
Pleasure
Craft
The pleasure craft class of insurance, which may sometimes
be referred to as Small Craft, is designed to cover boats,
motorboats, dinghies or vessels, which usually have a
maximum speed of 80Klms. Larger vessels, are normally
insured under a more specialized Marine policy.
The cover provided under this class of insurance is for loss or
damage to the vessels following defined events, and the
liability which may be incurred to third parties as a result of
using the vessel.
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Personal
Computers
The personal computer class of insurance provides cover to
the insured in respect of their personal computers, including
keyboards, monitors, printers and other accessories. This
cover is generally provided on an exclusion basis, hence
material physical loss or damage is covered, subject to a set
of exclusions.
Most insurers also provide cover for recompilation of data
and/or reinstatement of programmes, which may have
occurred as a result of accidental erasure. They may also offer
an Incompatibility cover, which may occur as a result of
material physical loss or damage to the personal computer.
Assessment
criteria 1.2
Five major perils associated with each of three classes
of short term personal/domestic insurance are named
and three additional perils are investigated for each of
the three classes
Fire
The major perils which are associated with the main classes of
insurance are fire, lightning, explosion, storm wind, water hail
and snow, impact damage and theft
Each of the classes has additional perils, which are covered for
the specific class of insurance.
Fire is generally considered the main peril under the
homeowners class of insurance as well as the householders,
the definition of fire is “actual combustion or ignition which is
accidental in origin and not in the place where it is intended to
be”
The damage caused from the fire may include water used to
extinguish the fire, which may often cause more damage than
the fire itself. The Firemen may need to destroy property to
prevent the spread of the fire, or walls may collapse which can
cause damage. There is also smoke damage to consider. All
this damage is considered as a direct consequence of the fire
itself.
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Lightning
The Lightning peril is again one of the main perils under the
homeowners and the householder’s class of insurance.
Lightning is generally defined as ” a form of visible electrical
discharge between a rain cloud and the earth.” The discharge
is the brilliant arc, which can be seen between the discharge
points.
Insurers will require metallic lightning rods for protection of
buildings from lightning, in circumstances where the buildings
roof is constructed of Thatch or wood shingle. This rod will
serve as a low resistance path for any lightning discharge;
they extend from the ground to a point above the highest part
of the roof.
Insurers will often request lightning protection for Computers,
or other
Electrical equipment, as one lightning strike can cause
substantial damage to such equipment, which is often unrepairable.
Explosion
Explosion can be defined as “an expansion of gas, liquid or
substance causing a substantial increase in pressure of the
surrounding air which in turn radiates pressure outwards in all
directions” Explosion is a major peril in most classes of
insurance. Many homes use gas cylinders for heaters etc, if
one of these cylinders explodes the damage can be
substantial. There are many other types of explosion such as
concussion damage from shock waves.
Storm, wind,
Water hail
And snow
Storm, wind, water, hail and snow are some of the more
common insured perils in domestic insurance. They can
endanger life, cause property damage and there are often spin
off causes such as soil erosion. The damage which has been
caused to motor vehicles and property in a vast area during
freak hail storms, has been catastrophic in nature due to the
high volumes.
Storm may be defined as “violent atmospheric disturbance
involving conditions of lightning, thunder, wind rain, hail or
snow either singly or in a combination”
Flood may be defined as “inundation overflowing or eruption
of a body of water over land which is not normally
submerged” Flooding often occurs after lengthy drought
periods and due to the global warming is becoming more of a
problem worldwide.
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Impact
The “Impact” peril is found in householders and homeowners.
The type of impact is usually defined, such as impact by
vehicles animals or trees. Most policies include impact by
Ariel, satellite dishes, aircraft and other Ariel devices or
articles dropped there from. Sudden damage to any building
caused by impact. The nature of accidents under motor
insurance is often defined as impact; however remember
there are no specific perils defined under motor, but rather
exclusions.
Theft
The theft peril can be found across most classes of domestic
insurance, Theft is defined as “the dishonest appropriation by
one person of the property of another with the intention of
permanently depriving the owner of it”. Theft of motor
vehicles and hi-jacking is common, as is housebreaking, which
often causes damage to the building too.
There have been claim in South Africa, for houses, which have
actually been stolen, in the form of bricks, roofing etc. this is
not usual but exists.
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Additional
Perils
Collapse
Additional perils found under the House owners section are as
follows;
Breakage or collapse of radio or television aerials or masts
including satellite dishes.
This peril is self explanatory, with the advent of DSTV and
MNet, this peril becomes very important.
Bursting
And
overflowing
Bursting leaking or overflowing of water apparatus, this peril
will usually includes the damage to the pipes themselves as
well as the resultant damage. During the winter month’s
insurers are flooded with claims for bursting geysers, where
the water freezes and expands into ice causing the geyser to
burst.
Earthquake
The Earthquake peril is found under both householders and
homeowners insurance. An earthquake can be defined as “
vibrations produced in the earths crust when rocks in which
elastic strain has been building up suddenly rupture” We are
somewhat lucky in South Africa as we are not an earthquake
zone. Some policies will cover earth tremor caused by mining
operations, but will generally apply an excess, the burden of
proof that the tremor was not as a result of mining operation
would rest with the insured.
Malicious
Damage
Malicious damage defined in a policy as a “Deliberate or willful
act excluding those caused or arising from theft” and is found
under the householders and the homeowner’s classes of
insurance.
Assessment
criteria 1.3
Additional benefits offered by three different short term
personal/domestic insurance insurers are researched
and an indication is given of how these will satisfy the
needs of different clients
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Keys and
locks
Loss of water
By leakage
Most insurers will offer additional benefits under their polices,
which will attract or satisfy the needs of their policyholders.
There are many additional benefits available under the various
classes of insurance, so we are naming but a few:
Keys and Locks (householders)
Loss of water by leakage (Homeowners and householders)
Cover for domestic staff property (householders)
Veterinary expenses (householders)
Security guards (householders and homeowners))
Breakdown expenses (motor)
Emergency hotel expenses (motor)
Key and Locks has become a common additional benefit, as
the costs of replacing them has become astronomical, insurers
will normally limit their liability. Clients in South Africa
generally have many locks and keys to their dwelling,
therefore if they are lost or stolen or damaged it is a costly
exercise to replace.
Loss of water by leakage. Policy holders owning swimming
pools have found themselves in a position where they have a
crack in the pool, which allows for leakage of a great deal of
water, or an underground pipe bursts, the bills that can arise
from these types of occurrences become costly.
Domestic
staff
Property
Domestic staff living on the client’s premises cannot always
afford their own insurance, this type of additional benefit
provides for a limited form of cover for their personal effects
and household goods, if they are lost or damaged by an
insured peril.
Vet Expenses
Veterinary expenses incurred as a result of accidental bodily
injury to the animal is covered up to limited amount, we all
know how expensive vet bills are these days and most
households have a pet or two.
Security
guards
Security guards are often needed to secure the premises after
a burglary, until the premises can be made safe again.
Insurers will normally limit their liability in this respect.
Breakdown
Breakdown expenses are covered when a vehicle breaks down
due to a mechanical or electrical fault, and the vehicle needs
to be taken to a repairer for its protection.
Emergency
hotel
Expenses
Emergency hotel expenses are covered under some motor
policies when there is loss or damage to the vehicle which
occurs more than 100 kilometres from the insured’s residence,
the insurers will limit their liability to the insured and one
passenger for a maximum of two days.
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Assessment
criteria 1.4
Additional types of cover that can be added to a short
term personal/domestic insurance policy are described
with reference to the unique policy options offered by
three different insurers
Legal costs
There is benefit from a sales perspective for insurers to offer
unique policy benefits to clients, in order to make their policies
more attractive and to differentiate themselves in the
domestic insurance market.
Some of the unique covers offered by insurers which are
added to the personal policy are:
Legal costs
Trauma Counseling
Roadside assistance
Domestic workers cover
Credit shortfall
Legal costs will usually provide indemnity to the policy holder
from R5000 up wards for claims arising from civil litigation
instituted against the policy holder, or defense against
criminal charges brought against the policy holder.
There are a number of exclusions such as:
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Any action if the prospects for success are not
reasonable
Actions directly or indirectly arising out of your
employment, business, profession or activity for reward
The ownership or use of any motor vehicle, trailer,
water-borne vessel or aircraft
Dishonesty, violence or indecency on your part
Subsidence
Divorce, custody, maintenance, guardianship,
curatorship and similar proceedings
Patents, copyrights, trademarks or trade names or
other similar intellectual property rights
Defamation and injury
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Trauma
counselling
Trauma counseling can be added as an additional unique
benefit to a policy, this may be a limited version, which will
cover the policyholder if he is a victim of a violent act of theft,
attempted theft, hold up of hi-jacking which necessitates
professional counseling.
The insurers will usually pay out a limit in the region of R2000
for such counseling and any one claim.
There are policies offering more extensive benefits for which
an additional premium is charged, these policies will include a
degree of personal accident benefit for injuries which may
occur as a result of road accident, theft or hi-jacking. These
polices also include a death benefit for death arising from the
road accident or trauma.
Roadside
assistance
Roadside assistance cover will usually offer the policyholder a
toll free number to dial in the event of an emergency which
will assist the policyholder with a tow truck, petrol, or repairs
as is required. Some policies will include directions mapping,
so if the policyholder is lost or need to find the best route to a
destination, the contact number will provide a map and give
full details to the policyholder. This type of additional of cover
is assistance services only and the policyholder will be liable
for the cost if the event is not covered by the policy.
Credit
Shortfall
Domestic
workers
policy
Credit shortfall is an additional cover added to a motor policy,
applying in the circumstances where a vehicle is stolen, hijacked or written off. The insurers undertake to pay the
registered finance company any difference between the
reasonable retail value and the settlement balance
outstanding under a valid credit agreement, subject to the
total amount not exceeding the limit of indemnity shown in
their policy schedule.
This type of additional cover can provide a funeral benefit for
the domestic worker and their dependants, it could have a link
to an investment such as unit trusts providing the domestic
with a pension
Benefit. There are a number of these types of policies
available; some will provide liability cover and accident
benefits for domestic workers, while they are working at the
insured’s dwelling.
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Assessment
criteria 1.5
The terms and conditions that apply to three classes of
short term personal/domestic insurance are explained
and identified in a policy document
Terms and
conditions
The general terms and conditions applicable to most personal
insurance polices are listed below:
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Misrepresenta
tion,
misdescriptio
n and nondisclosure
Misrepresentation, misdescription and non-disclosure
Other insurance
Cancellation/premium payment
Prevention of loss
Claim procedures and requirements
Automatic increase margin
Jurisdiction
Prescription
Fraud
Reinstatement of insured amounts
Misrepresentation, misdescription and non-disclosure of any
material particular shall render voidable the particular item;
section or sub-section of the policy, as in the case may be,
affected by such misrepresentation, misdescription, or nondisclosure.
This condition protects the insurers against the policyholder
misrepresenting facts, or misdescribing the item to be insured
or the risk itself. It also protects them is the client fails to
disclose something about a risk to be insured which he is
reasonably expected to advise the insurers of.
Other
insurance
Non-payment
of premium
Cancellation
“Other insurance” condition states that if a claim is payable
under the policy and is also payable under any other policy the
insurer will only pay their rateable proportion of the claim.
Other wise termed as contribution condition.
The premium condition confirms that the premium is payable
in advance, if the premium is not paid on the due date the
cover will remain in force for a further 30 days. The
policyholder will then be redebited for the monthly premium, if
after 30 days the premium remains unpaid the policy will be
cancelled. In the case of annual premium the insurers are not
obliged to accept any premium tendered 15 days from the
inception date.
The Cancellation condition indicates that if the policyholder
wants to cancel the policy or any section of the policy, they
may do so immediately at any time but if the insurer cancels
the policy of section they need to give 30 days written notice
to the policy holder, to their last known address.
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Prevention of
loss
Claims
procedures
Automatic
increase
margin
Jurisdiction
Prescription
This condition states that the Insured must take all reasonable
precautions to prevent loss, damage and accidents and may
affect emergency repairs to their property to prevent further
damage if the need arises.
This condition may vary from insurer to insurer but generally it
will include requirement such as:
 In the event of an occurrence, which may result in a
claim, the policyholder must notify the insurer as soon as
possible, as well as any other insurer, which covers the
same occurrence.
 Within 30 days of the occurrence the insured must
supply the insurer with full details of the occurrence, as
well as clear and full details and documentation, which
may be reasonably required.
 If the insured is aware of any possible prosecution or
legal proceedings or claim against them they must
immediately inform the insurers in writing.
 Any occurrence where theft or criminal act or loss is
involved must be reported to the police immediately
 If more than one person is covered under the policy the
insurers may at their discretion make payment of any
claim to any such persons. The payment will then
discharge the insurer from any further liability.
 The insured may not make an, admission of guilt, offer,
or promise to give indemnity without the insurer’s
written permission/consent. Any other person may also
not do so on behalf of the insured.
This is usually a clause, which provides for an inflationary
increase to the household contents and building sections of the
policy. What this means is that the values will be adjusted
automatically on anniversary date by the % stated in the
schedule, this percentage is commensurate with price indices for
inflation. It does not however relieve the insured from their duty
to ensure that the property is insured for the full replacement
value at all times.
This condition provides that the policy is restricted to the
jurisdiction of the courts of the republic of South Africa and
sometimes includes Namibia. This provides that the insurers will
not be responsible for any legal costs or expenses not incurred
in the republic of South Africa.
The prescription condition usually provides that in the event of
the insurers declining a claim the insured will have 90 days from
the date of the declinature to appeal in writing, the insured also
has 90 days after this period to institute legal proceedings
against the insurer if the appeal is not successful. If the insured
fails to do this then the insurers will no longer be liable for the
claim.
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The second part of the prescription condition relates to the
expiry of 12 months from the date of occurrence of a claim, the
insurers state they will not be liable unless the claim is subject
of a pending court action between the insured and insurer or is
subject to arbitration, or is a claim for sums for which the
insured is legally liable.
Fraud
The insurer states that the policyholder will forfeit all rights to
indemnity if a claim is in any respect fraudulent or if fraudulent
means are used by the insured to obtain benefit under the
policy.
Reinstate
ment of sums
insured
Or if a claim in any way occurs due to a willful act committed by
the insured or with the insured’s connivance.
The insured amounts stated on the policy will not be reduced by
any amount of a claim. The insured is requested to pay the
premium on the amount of the claim from the date of the loss
or damage to the expiry of the policy. This condition usually
only applies to the household, buildings and all risk sections of
the policy.
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Assessment
criteria 1.6
Five exclusions that apply to three classes of short term
personal/domestic insurance are explained and identified
in a policy document
Depreciation
wear and tear
We will first look at exclusions which relate to the motor class of
insurance.
The first exclusion is always the excess applicable and any
voluntary excess, which may have been applied to the motor
section.
One of the main exclusions is that of depreciation, wear and
tear, gradually operating causes, mechanical or electrical
breakdown, failure or breakage.
Drivers
licence
An example of such an exclusion may be where a client
attempts to claim for a tyres and damage on a motor vehicle
which has been damaged as a result of wear and tear to the
tyres eventually leading to a burst. If this is determined at the
time of the claim the insured may well refuse to pay for any
other damage suffered to the vehicle as a result of the tyre
bursting due to wear and tear.
Another exclusion is that of driving without a license to drive
such a vehicle in terms of the legislation applying to the
territory in which the vehicle is being used. The exclusion would
not apply if a leaner driver is driving in accordance with the
legislation applicable. If someone else if driving the insured’s car
with their consent and does not hold the required licence, the
exclusion will still apply.
Alcohol
One of the more common exclusions but very difficult for
insurers to prove, is the alcohol and drugs exclusion. This
exclusion applies if the insured or any other person with the
insured’s consent is driving the vehicle under the influence of
intoxicating liquor or drugs or while the concentration of alcohol
in the insured’s blood stream exceeds the statutory limit.
As mentioned initially this is very difficult to prove if the insured
has not undergone a blood/alcohol test and all the procedures
have been followed.
There are other exclusions which have not been mentioned, in
order for you to get a full understanding it will be necessary for
you to analyse a policy wording used in your organization.
We now take a look at the contents class of insurance.
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Excess
The exclusions under the householders class of insurance are
few, the basic excess or any voluntary excess is a standard
exclusion, however there are a few other which we should be
aware of:
Money
Theft of money or negotiable instruments from any building is
usually excluded, unless the theft is accompanied by forcible
violent entry into or out of the building specified in the schedule.
Valuables
A very important exclusion is that of limit on valuables, some
policies on the market limit valuables to one third of the
household goods sum insured this would include such items as:
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Precious metals
Stones
Jewellery
Furs
Rugs and carpets
The wording often used within the policy is “any amount in
excess of one third is excluded” hence the insurers will only pay
up to one third for these items.
If requested to do so, insurers would be able to increase the
one-third limit, an additional premium will be charged, and the
insurers will possibly require additional theft protections, as
these types of items are particularly attractive to thieves.
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More
Specifically
Insured
Property more specifically insured is excluded under the
household section. This exclusion can be found in most sections
of a personal lines policy. This is usually intended for those
items, which are insured under the all risks section of the policy.
When calculating the household sum insured the policyholder
should subtract whatever the value of the all risks items are,
provided they fall within the definition of household contents.
A loss adjuster when checking the adequacy of the sum insured
would need to take into account the items insured under the all
risks section if the client was at home at the time of the loss. If
the client was outside of the home it is possible that the
personal effects sum insured would already be at risk, but it is
unlikely that all the specified items would be.
The exclusion would also cover those items, which may have
their own insurance in place, such as items purchased on HP.
Territorial
limits
The territorial limits under the contents section would exclude
any loss or damage caused, sustained or incurred outside of:
 Republic of South Africa
 Lesotho
 Botswana
 Swaziland
 Namibia
 Malawi
 Mozambique
 Zimbabwe
This implies that insurers will insure contents in the countries
mentioned in the territorial limits. This is not the case if the
policyholder is temporary residing in one of the countries then
the policy is intended to cover the contents, or if the
policyholder has a holiday home in one of the countries
mentioned he may insure it with an insurer in South Africa.
Motor
vehicles and
the like
There is a standard exclusion in most contents policies will
exclude:
Motor vehicles, caravans and trailers including their fitted
accessories, air or watercraft and their equipment, livestock or
trade goods of any description.
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We now take a look at the exclusion under the homeowners
class of insurance:
Excess
Building
Operations
The excess again is the first exclusion usually mentioned by
most policies, this exclusion may refer to one excess across
the board, or could define certain excesses, which are
applicable to different events.
For example the may be a higher excess applicable to
lightning damage, or the bursting or overflowing of water
apparatus.
While any building insured is being constructed or structurally
altered this presents an additional risk to insurers, most
insurers will exclude:
 Damage to glass and sanitary ware
 Rent which would have been covered if the dwelling
was rendered uninhabitable
 Liability to the public for loss or damage arising directly
or indirectly from the building construction or
alterations
Mortgagee
Clause
In view of this exclusion the policyholder would need to ensure
that the building contractor employed to carry out the
construction/alterations has adequate insurance cover in
place.
Many policies have the mortgagee clause. This is not
necessarily regarded as exclusion but rather a clause; it does
however restrict the interest of the insured. The clause
provides that the interest of the mortgager ranks prior to the
insured’s; this interest is limited to the amount owing to the
mortgager by the insured on their home loan account in
respect of the dwelling insured.
The clause also provides that the interest of the mortgager will
not be invalidated by any act or omission of the insured if the
act or omission occurs without the mortgagee’s knowledge.
The clause proves very important in financial institutions, for
example if it is established that the insured has committed
arson, having set fire to his own house in order to collect
monies from insurers, the insurers have enough evidence to
reject the claim submitted, as they are able to prove that the
client committed fraud. However in view of the morgagee
clause, the financial institution interests are still protected,
provided they were not aware of the insured’s intentions. The
insurer would compensate the financial institution in respect of
the amount owing to them provided the sum insured is
adequate.
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Subsidence
and landslip
Subsidence is generally excluded, it can however be
reintroduced into the cover for additional premium. The
subsidence exclusion will normally read
“Loss or damage caused or aggravated by subsidence or
landslip, irrespective of it following storm, wind, hail, snow or
bursting of water tanks, apparatus or pipes”
Assessment
criteria 1.7
The differences between an annual, monthly and
specified period policy are explained with examples
Monthly
In personal/domestic insurance the most common term for a
policy is that of monthly. This means the policyholder may pay
the premium monthly, which may be more affordable, rather
than one large annual amount. The premiums for monthly
policies are normally collected by debit order either by the
intermediary or the insurer. The monthly policy is in force only
for a month at a time and is renewed at the end o every
month.
Annual
An annual policy is taken out for a full year; the benefit the
policyholder derives is that he is guaranteed not to suffer any
premium increase, as he has paid the premium upfront for the
12-month period. Some insurers also offer a discounted
premium, as a result of saving in administration costs to the
policyholder, as opposed to what they would charge a monthly
policyholder.
Specified
period
This type of policy in personal/domestic insurance would
normally relate to a travel policy, which would be taken out for
the specified period of a policyholder’s holiday. The policy
would state the specific dates covered and a once off premium
would be charged to the client for the specified period.
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Assessment
criteria 1.8
The proposal process in short term personal/domestic
insurance is explained and the implications of non
disclosure are explained at claim stage
The proposal process in domestic/personal insurance usually
requires a proposal form to be completed by the insured. This
would either be in writing, or within a call center environment
the customer may answer the relative questions over the
phone. These answers would be voice recorded in the event of
any dispute at a later stage.
In order for the insurer to properly provide cover to the
customer, and to ensure that that the customers needs are
adequately met, all the fullest information should be provided,
in order for the insurer to assess the risks that might pertain
to the customer’s assets.
It is a
about


requirement that the customer offers all information
the risk that may influence the insurers decision on
Accepting the risk in the first place
Amending the terms of acceptance (increasing the
rates or adding an excess)
 Reducing the benefits under a certain section of the
policy
 Imposing condition or warranties on the customer to
protect the risk
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Material facts
Only information that would effect the insurer’s decisions,
otherwise known as material facts, needs to be disclosed.
Examples of material facts which must be disclosed are:
If a prospective policyholder has had his driver’s license
suspended for reckless driving, and he is seeking motor
insurance, he must disclose this to the insurer.
Materiality
A prospective policyholder seeking theft insurance under a
householder’s policy would need to disclose that he had been
criminally convicted of fraud in the past.
The materiality of the fact is dependant on the type of
insurance that the customer is seeking, for example, a
customer seeking building insurance would not need to
disclose that his license had been suspended for wreck less
driving.
The consequences of not disclosing material facts or any other
information requested on the proposal forms could potentially
result in a claim being refused. The entire policy or section
may be cancelled too.
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2. Specific Outcome 2:
Calculate a rate based on the
risk
Assessment
criteria 2.1
The risk in five short term personal/domestic insurance
policy proposals is analysed and the appropriate rate is
calculated manually for each risk
Homeowners
The rating of the various classes of domestic insurance differs
from class to class. We will take a look at some of the rating
structures that are applied.
Homeowners insurance is rated in accordance with the
construction of the building.
Standard construction is defined as “the private dwelling built
of brick, stone, or concrete and roofed with slate, tiles,
asbestos or concrete.
The rate is normally charged on the sum insured to arrive at
the premium.
Example:
Sum insured: R500 000
Rate: 0.15% premium: R750
This would be the annual premium for a building insured for
R500 000 with a standard construction. The rate would be
loaded for thatch or shingle dwellings.
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Householders
The rating factors in the householders class of insurance
normally include the following;





Situation
The situation of the house (area)
The construction of the house
The anti-theft protections
The occupation of the insured
Claim free group the insured falls within.
The situation of the house is very important, as urban areas
are usually rated higher than the country areas because of the
theft risk. The house may be situated on the beachfront or
river, which may be susceptible to floods. This could also
affect the rate charged.
Construction
The construction concern is the same as that for homeowners,
a thatch or shingle risk present insurers with a higher fire risk,
and the appropriate increased rate would be charged.
Anti-theft
The anti theft protections help insurers to decide whether or
not to accept the risk, rather than a factor effecting the rating.
Occupation
The occupation of the insured is of relevance. For example
pensioners who are generally at home most of the time. The
insured may have an occupation as a pilot, which will take him
away from home for periods of time leaving the home
unoccupied. These cases would result in a reduction in rate for
the pensioner and a possible increase in rate for the pilot.
Claim free
group
The claim free group will illustrate how many years the
policyholder has been claim free giving an indication of the
risk involved to the insurer, the rate ins normally discounted
by a percentage depending on the claims group the
policyholder falls into.
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Rate
The householder’s policy is again rated on a sum insured and
a percentage is applied.
Example:
Sum insured for contents R150 000 rate: 0.50% premium:
R750
This is the annual premium and as you can see the contents
rate is always much higher than a buildings rate as the risk is
higher.
All Risks
The all-risks class of insurance under a personal insurance
policy allows for the insurance of miscellaneous unspecified
items and specified items, which are separately insured. These
two risks are rated seperalty.
The unspecified section covers articles of personal effects,
which are normally worn, used or carried on the person; there
are some exclusions to these.
There is usually an overall sum insured with a single item limit
Example:
Wearing apparel and personal effects sum insured: R5000
(Limit any one item 20 % of the sum insured).
Rate
An example of rating of the unspecified all risks section would
be:
Example
Sum insured R5000 rate: 5%
Premium: R250
Specified
The specified section of the all risks policy would be rated
individually depending on the article to be insured, for
example a car radio is very attractive from a theft point of
view when compared to a precious vase. The items would
therefore be rated differently, the car radio costing more than
the precious vase.
Rate
Again the rate is a percentage of the sum insured.
Example
Cell phone sum insured R4000 rate: 11% premium: R440
Again note this is the annual premium, you will also notice
that the rate is much higher than the householders and
homeowners as the risk is again higher.
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Personal
accident
Personal accident insurance compensates the insured for
injury or death caused by violent external visible means as a
direct result of an accident. The maximum payable is 100% of
the death benefit.
It is usual for this type of cover to be sold in units of R1000.
This applies to the death benefit, and the rating factors
depend on the occupation of the insured. For example a
carpenter or roof tiler carries a higher rate than a doctor.
Example
Rate
If the customer selects R100 000 death benefit cover
The rate is R20 per R1000 unit
The annual premium is R2000
Some insurers may use a percentage.
Motor
Motor insurance under a personal/domestic policy uses the
following factors to determine rates:







The type of cover required
Area in which the vehicle is normally driven
The value of the vehicle
The use of the vehicle
The no claim bonus
The type of car
The age of the driver
Some insurers may use additional factors which they have
proven useful from their statistics.
Rate
The methods of rating motor vehicles vary from insurer to
insurer, some insurers will use a set rate for the first R25 000
of the sum insured then, apply a different rate for the balance
depending on which category the vehicle falls into and which
area. The rate will then be loaded or discounted in respect of
the age or use of the vehicle, and further discounted
depending on the claim free group.
Personal
Liability
A personal Liability rate is usually a flat rate applied to the
sum insured selected by the client, this sum insured is
normally set as standard within the policy, in most instances
the insurer does not charge for personal liability cover at all as
it is built into the rate for buildings and householders. If they
do charge the premium is hardly noticeable at around R12 per
annum for R3 000 000 worth of cover.
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Assessment
criteria 2.2
The effect of age, location and loss history on premium
on short term personal/domestic insurance is explained
for five case studies
Age
The effect of age on the premium would normally apply across
the various classes, as this gives an indication of the lifestyle
of the insured, as well as their maturity and sense of
responsibility, which can all impact on the premium charged.
For example an insurer would not charge the same premium
for a motor vehicle to a 55 year old person who has been
driving all their lives as they would a 21 year old who has just
obtained his licence. The risk is far greater in the second
instance.
Location
The location of the risk is a factor across most of the classes
of insurance as it may affect the risk of theft, storm, or flood,
as well as the potential fire or earthquake risk.
For example if a house is built close to a river or sea front it
may be more susceptible to flood or storm damage than a
house situated in an inland area.
A dwelling, which is situated next to an open piece of land,
may constitute a higher risk for theft as access is made easier
to the property and the getaway point is clearly available.
Claims history
A home that is situated in the countryside far away from the
nearest fire brigade may present a higher fire risk, as it would
take some time for the fire brigade to reach the house.
The numbers of claims and the amount paid out for each also
influences the premiums charged. Two policyholders with
similar profiles may be offered different premiums as a result
of their claims history.
The statistical base from which insurers generate their rating
relies on the policyholders experience tallying with that of the
statistical chance of losses occurring. If the policyholder’s loss
history does not illustrate that it is within these parameters
then the policyholder will be charged additional premiums.
In personal/domestic insurance the claims free group often
takes into account the claims history and allows the
policyholder a discounted premium if they have been claims
free.
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2016/03/08
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3. Specific Outcome 3:
Investigate the structure of
the short term personal/domestic insurance market in
South Africa
Assessment
criteria 3.1
The different avenues for a client to obtain short term
personal/domestic insurance in South Africa are named
and the advantages and disadvantages of each are
explained with examples
Direct
The different avenues that a client may obtain
personal/domestic insurance are:


Direct with the insurer
Through an intermediary
If a client chooses to take out insurance directly with the
insurer they would usually go to a Direct Insurer. This market
has increased substantially in South Africa over the last 5
years. This type of insurer will generally work through call
centres and will take all the clients details over the telephone
providing them with a quote and acceptance there and then.
The advantages to the policy holder are:





Quick and convenient
Availability is often 24 hrs 7 days a week
Only the telephone needs to be used
No forms to fill in
There is a voice recording of discussions
The disadvantages to the policy holder are:





Lack of personal contact
Lack of expertise
Lack of technical assistance
No one to hold their hand in the event of a claim
Never seem to be able to speak to the same person
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Direct
Cont.
A client may chose to obtain their insurance through an
intermediary; this may be an insurance broker, the brokerage
division of their bank, a financial consultant or agent or Lloyd’s
brokers.
The process may differ, but most intermediaries will offer a
personal service as well as telephonic, many of the larger
brokers and bank brokerages have call centres, and can issue
policies on behalf of the insurers under a written mandate.
The advantages of using an intermediary are:





Personal contact
Expert advise
Technical advise (may send out a surveyor)
Purchasing power with insurers in the event of a
disputed claim
Speedy processing of a claim (many brokers have
claims mandates)
The disadvantages to a policy holder are:



Assessment
criteria 3.2
No real direct contact with the insurer
Sometimes second hand information
Lloyds broker may have to wait for claims to be paid
out from overseas if they do not have sufficient
mandates
Policyholder protection legislation is applied to each
avenue for obtaining short term personal/domestic
insurance and an indication is given of how the
legislation protects the client and regulates the insurer
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The policy holder protection rules protects both the
policyholder and regulates the insurers in the following ways:
Disclosures have to be made to the policy holders which
include:
Insurance broker
 Name, physical address and postal address and
telephone number.
 Legal status and any interest in an insurer
 Whether or not in possession of professional indemnity
insurance
 Detail of how to institute a claim
 Rand amount of fees and commission payable
 Written mandate to act on behalf of the insurer.
Insurer
 Name, physical and postal address and telephone
numbers.
 Telephone number of the compliance department of the
insurer
 Details of how to institute a claim and or complain
 Type of policy involved and extent of premium
obligations you assume as policyholder
 Manner of premium payment, due date of premiums
and consequences of non-payment
 Any material changes to the above, a well as other
details such as loadings excesses and special
conditions.
There are additional requirements:
 Reasons must be given for the repudiation of claims
 Debit orders or policies shall not be unilaterally
terminated without notice
 Not less than 15 days of grace for payment of
premiums
 Policyholders must not sign blank or partly completed
policy forms
 Policy holders are entitled to a copy of the policy free
of charge
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It is therefore important to note that whichever avenue the
policyholder chooses to obtain their insurance through, each
avenue will have to abide by the policy holder protection rules.
If the client goes through an insurer directly then they will
need to complete the disclosures, which may be relevant that
would normally attach to an intermediary.
A call centre would need to ensure that all the disclosure
information that is needed is either telephonically advised to
the policyholder or sent to them.
If the broker has a binder authority (written agreement from
the insurers to enable then to issue policies and pay claims)
They will need to ensure that all the relevant disclosures that
the insurer needs to make to the policyholder are included in
any documentation or correspondence made with the
policyholder.
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4. Specific Outcome 4:
Explain the need for
reinsurance in a short term personal/domestic insurance
policy
Assessment
criteria 4.1
The need for reinsurance in short term
personal/domestic insurance is explained and an
indication is given of the consequences if there is no
reinsurance in place
Treaty
Insurers usually are able to retain most personal/domestic
risks for their net account; there are some risks, which they
need to reinsure.
There are generally two types of reinsurance used in
personal/domestic insurance, treaty reinsurance and
facultative reinsurance.
Facultative
Treaty reinsurance is arranged annually, a percentage of each
and every risk is ceded to the treaty and quarterly
declarations are made to the reinsurer, for example, 40% of
all premium and claims would be the Treaty Reinsurers
responsibility.
Facultative reinsurance – the insurer examines each risk
individually and contacts the reinsurance company to inform
them of the details of any risk that they are uncomfortable to
accept for 100% for their account. The reinsurer will then
either accept or decline the risk, or may ask for different
terms or conditions.
Reinsurance is needed in personal/domestic insurance to
ensure that the insurer does not over expose themselves to
certain risks, for example a catastrophe loss which involves a
substantial part of an insurer’s book of business may leave
them in a poor financial position if they did not arrange
reinsurance to protect then from such occurrences.
A major hailstorm could damage many motor vehicles and
houses, within a vast area; the insured needs to ensure that
they are protected with reinsurance for such losses.
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An insurer may only wish to retain up to a certain limit for a
particular class of business, anything above this amount may
need to be reinsured.
For example in the personal accident class of business, an
insurer may only wish to hold up to R150 000, per death
benefit, if there is a serious
Accident involving many policyholders then at least he knows
that his liability is restricted the limit he has set.
Or
On a R1 200 000 motor vehicle such as a Ferrari the insurer
may only want to cover the first R400 000 so the other R800
000 will have to be reinsured faculatatively
Assessment
criteria 4.2
In house limits for a specific short term
personal/domestic insurance organisation are
explained and an indication is given of when it is
necessary to refer a policy proposal to a higher level of
authority
Different insurers will have different in house limits in respect
of what amount of retention they allocate to the different
classes of personal/domestic insurance.
Most insurers produce a set of underwriting criteria; this will
clearly show the limitation for different classes of insurance.
There will usually be an instruction where a limit is reached to
the effect that no risk may be accepted with out referral to
head office or the reinsurance department. This will then
enable the Insure to evaluate the risk, and approach reinsurers as and when necessary to arrange the additional
capacity required.
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2016/03/08
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5. Specific Outcome 5:
Demonstrate principles and
practices of sound interpersonal skills
Assessment
criteria 5.1
Negotiation skills needed to secure new business are
demonstrated for five different scenarios
Negotiation
Skills
The negotiations skills needed to secure new business are as
follows:














Listening to the clients needs
Understanding the clients problems
Product knowledge
Competitors product knowledge
Knowledge of processes and systems within both
broker and insurers
Clear mandates
Establish common grounds with the client
Demonstrate interactive behaviour (clarifying, initiating
and feeding back)
Collecting as much information about the client and
their circumstances before the discussion
Using a organisation customer relationship
management system for preparation
Ensuring that you keep something back for later if
needed (don’t put all your cards on the table upfront)
Recognising (expressing empathy, acknowledging)
Check out assumptions made about the client
Revealing behaviours (disclosing your motives or
thought process)
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An example of some of the skills in action are demonstrated
for a personal/domestic situation:
A client indicates that they simply cannot afford insurance the
insurance cost.
Listening
skills
Explore and listen to the clients needs and offer alternative
solutions, by attempting to establish the least cover that he
can afford and adjust the premium quoted accordingly. The
client will at least be protected for their basic requirements.
A client cannot afford to pay the once off administration
charge up front.
Knowledge of
systems
Know the system well enough and use this to your advantage
to retain the client, by finding a way around paying the once
off fee over two months, or at a different time to the
premium.
A client telephones to advise that they have a better quote
from one of your competitors.
Competitor
knowledge
Knowing your competitors products may allow you’re to use
them to sell the positive aspects of your own products, such
as higher excess that the competitor may have or a more
limited cover.
Ensure that
you keep
something
back to
secure the
deal
A client is thinking of taking the policy but cannot make up his
mind.
Clarifying
understanding
A client seems confused relating to a technical point.
In this case by not having advised the client of all the great
benefits offered by your product, you may come in at this
point and secure the new business by leaving no doubts in his
mind that the deal is the best for him
In this case clarifying the clients understanding by establishing
if they have grasped the meaning of a concept can make all
the difference to your negotiation.
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Assessment
criteria 5.2
Reasons why an item or risk is covered or
excluded/endorsed are explained with reference to the
initial underwriting criteria used in short term
personal/domestic insurance
Most insurers have a set of underwriting criteria against which
they will underwrite the different classes of domestic/personal
business.
The underwriting criteria sets out the parameters around
which they will accept certain types of risks and under what
conditions.
The criteria will also indicate the limitations for referral
purposes, i.e. where reinsurance is required.
Initial underwriting criteria is indicated for one of the insurers
in the market below:
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Underwriting
 Policies may only be issued in the name of the private
individual, including deceased Estates and/or trusts
 No communes (3 or more people sharing a residence
together) of any kind will be accepted
 If policies are issued in more than one name, the name
is to be followed by the letters “FTRRI” (for their
respective rights and interests)
 Quotes on items are only valid for 30 days
 No theft cover for new business will be accepted for the
period 15th November until 15th January (please refer
VIP cases, if cover required)
 Proposals will not be accepted from persons under the
age of 26 years
 A full description of the clients occupation must be
provided
 Claims declaration section must be verified by the
broker within 7 days of inception of cover to ensure
accuracy of the information provided by the proposer
 Security discounts e.g. Linked alarm, tracking device,
may not be allowed until such time as the broker is in
receipt of proof of the security device/s
 Maximum starter NCD of 3 is permitted in the event of
a proposer not having had previous insurance. This
NCD may not be allocated if the proposer has had
previous insurance cover but is unable to provide proof
of the NCD.
 ID numbers must be captured in full
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 R have a separate underwriting criteria for each class of
Insurers
i to which all the initial underwriting criteria applies
business
s with the separate criteria for each class.
together
k
s of the initial underwriting criteria reasons why
In terms
insurers apply such criteria are indicated below.
i
 n
Policies may only be issued in the name of the private





individual, including deceased Estates and/or trusts
i
s
o(This ensures that the policy is only taken out for
individuals
as the intention of the personal policy is not
l
for
companies
or organisations)
a
t
No
e communes (3 or more people sharing a residence
together)
of any kind will be accepted
d
a(A commune presents a more hazardous risk, both
r
from
a fire and theft perspective, many people in and
e
out of the house.)
a
sIf policies are issued in more than one name, the name
is to be followed by the letters “FTRRI” (for their
(respective rights and interests)
m
o
(It is necessary to ensure that the interests of all the
r
policy holders are noted, especially at the time of a
e
claim, but only for their insurable interests in their
specific
goods)
t
h
Quotes
on items are only valid for 30 days
a
n
(Premiums may change within a month and the
insurers
do not want to be held to these premiums)
1
0
No theft cover for new business will be accepted for the
k
period
15th November until 15th January (please refer
m cases, if cover required)
VIP
’
s(During this period many clients go away on holiday
leaving the premises empty and the risk high)
f
rProposals will not be accepted from persons under the
o
age of 26 years
m
(This
age risk is very high due to irresponsibility, lack
n
of
experience)
e

a
ensure
accuracy of the information provided by the
r
proposer
e
s
t
C
B
D
a
n
d
10369 – Learner Study Guide
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A
P
2016/03/08
Page 40 of 45

A full description of the clients occupation must be
provided
(To insure the risk is evaluated properly)

Claims declaration section must be verified by the
broker within 7 days of inception of cover to
(To ensure that there is no misrepresentation)

Security discounts e.g. Linked alarm, tracking device,
may not be allowed until such time as the broker is in
receipt of proof of the security device/s
(To ensure the information given by the policyholder is
correct and a discount is not given incorrectly)

Maximum starter NCD of 3 is permitted in the event of
a proposer not having had previous insurance. This
NCD may not be allocated if the proposer has had
previous insurance cover but is unable to provide proof
of the NCD.
(To allow the client the benefit of their experience)

ID Numbers required
(To ensure the age is correct and that there is no
fraud)
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Glossary
Glossaryof
ofTerms
Terms
Accident
An
Anunforeseen
unforeseen
andand
unintended
unintended
eventevent
or occurrence
or occurrence
Adjuster/
Assessor
See
SeeLoss
Loss
Adjuster
Adjuster
Agreed value
Average
The
Thesum
sum
toto
bebe
paid
paid
in the
in the
event
event
of a of
total
a total
loss under
loss under
a valued
a valued
policy
policy
In general, this is a policy provision that has the effect of reducing a
claim
In general,
paymentthis
where
is aunder-insurance
policy provision
is discovered.
that has the effect of
reducing a claim payment where under-insurance is discovered.
Broker
A professional full time independent agent or intermediary
A professional full time independent agent or intermediary
Betterment
The value of the improvement in an insured property when it has been
repaired
The value
or rebuilt
of thefollowing
improvement
loss or in
damage
an insured property when it has
been repaired or rebuilt following loss or damage
A demand made by the insured for payment after the occurrence of loss
or damage covered by the policy
Claim
Claim form
Co-insurance
A demand made by the insured for payment after the occurrence
Aof
form
losssupplied
or damage
by ancovered
insurer to
byenable
the policy
an insured to lodge a claim in
terms of the policy
A form supplied by an insurer to enable an insured to lodge a
The
claim
division
in terms
of a risk
of the
between
policytwo or more insurers, where each is
individually liable to the insured for their proportion of claims
The division of a risk between two or more insurers, where each
Aispolicy
individually
covering liable
a wideto
variety
the insured
of perils,for
part
their
of aproportion
contract that
ofmust
claims
be
complied
with
by
one
party
or
another
Comprehensiv
e
A policy covering a wide variety of perils, part of a contract that
Policy
The
must
principle
be complied
wherebywith
two or
bymore
one party
insurers
or covering
anotherthe same risk
contribute proportionally to any losses
Contribution
Damages
The principle whereby two or more insurers covering the same
An
risk
amount
contribute
of money
proportionally
claimed by ortoawarded
any losses
to a third party as
compensation for injury or loss
The
An extent
amount
to of
which
money
(insured)
claimed
property
by orhas
awarded
diminished
to ain
third
value
party
due to
as
factors
compensation
such as wear
for and
injury
tear
or loss
Depreciation
The extent to which (insured) property has diminished in value
An
due
insurer
to factors
in contact
suchwith
as wear
insuring
and
members
tear
of the public or corporations
Direct insurer Documentary evidence of some alteration to a policy of insurance
An insurer in contact with insuring members of the public or
corporations
Endorsement
Documentary evidence of some alteration to a policy of insurance
Exception
A peril specifically excluded from the insurance
10369 – Learner Study Guide
Excess
2016/03/08
Page 42 of 45
That part of a loss for which the insured is liable
Exception
AAperil
peril
specifically
specifically
excluded
excluded
fromfrom
the insurance
the insurance
Excess
That
Thatpart
part
of of
a loss
a loss
for for
which
which
the insured
the insured
is liable
is liable
Fire
The
Theaccidental
accidental
or fortuitous
or fortuitous
ignition
ignition
of something
of something
that should
that not
should
be onnot
fire
be on fire
First amount
Payable
The
Theamount
amount
payable
payable
by an
by insured
an insured
in theinevent
the event
of a claim
of a claim
Indemnity
The
Theplacing
placing
of of
thethe
insured
insured
in the
in same
the same
financial
financial
position
position
after theafter
loss the
as
he
loss
or she
as he
was
orinshe
immediately
was in immediately
prior to the occurrence
prior to the occurrence
Insurance
AArisk
risk
transfer
transfer
agreement
agreement
whereby
whereby
the responsibility
the responsibility
for meeting
for meeting
losses
passes
lossesfrom
passes
one from
party one
(the party
insured)
(the
to another
insured)
(the
to another
insurer on(the
payment
ofinsurer
a premium
on payment of a premium
Insurance
Policy
AAdocument
document
that
that
is evidence
is evidence
of a of
contract
a contract
of insurance
of insurance
Insured
AAperson
person
oror
organization
organization
purchasing
purchasing
insurance
insurance
Insurer
AAcompany
company
or or
society
society
transacting
transacting
insurance
insurance
business
business
Knock for
Knock
Agreement
An
Anagreement
agreement
between
between
motor
motor
insurers
insurers
whereby
whereby
following
following
a collision,
a
each
collision,
pays the
each
cost
pays
of repairs
the cost
to its
of own
repairs
policy
toholders
its own
vehicle,
policy regardless
holders
ofvehicle,
fault, provided
regardless
that the
of fault,
vehicles
provided
involvedthat
are the
all insured
vehicles
for involved
accidental
damage
are all insured for accidental damage
Liability
AAclaim
claim
upon
upon
ones
ones
assets
assets
by another
by another
person.
person.
Loss adjuster
An
Anindependent,
independent,
qualified
qualified
person
person
who assesses
who assesses
the sizethe
or size
valueor
ofvalue
a loss
on
ofbehalf
a lossofon
anbehalf
insurer,
ofbut
an who
insurer,
may but
also who
be employed
may also
bybe
anemployed
insured to
look
by an
after
insured
is interests
to look
in aafter
loss settlement
is interests in a loss settlement
Loss
prevention
Activities
Activities
undertaken
undertaken
to prevent
to prevent
losseslosses
from occurring
from occurring
Market value
The
Theprice
price
at at
which
which
an investment
an investment
can be
can
sold
beor
sold
bought
or bought
at any specific
at any
time
specific time
Negligence
Failing
Failing
toto
actact
in what
in what
the the
law considers
law considers
to be a
toreasonable
be a reasonable
manner
manner
Peril
A contingency or fortuitous happening that could cause losses
A contingency or fortuitous happening that could cause losses
Policy
Written evidence of the terms of an insurance contract
Written evidence of the terms of an insurance contract
Policy holder
The insured person
The insured person
10369 – Learner Study Guide
Premium
2016/03/08
Page 43 of 45
The money paid by the insured to the insurer for cover as
Premium
The
Themoney
money
paid
paid
by by
thethe
insured
insured
to the
toinsurer
the insurer
for cover
for as
cover
provided
as in the
policy
provided in the policy
Professional
reinsurer
AAreinsurance
reinsurance
company
company
not not
transacting
transacting
any direct
any direct
insurance
insurance
business
business
Proximate
cause
The direct cause of a loss uninterrupted by any other event
The direct cause of a loss uninterrupted by any other event
Rate
The sum charged per unit of exposure by which the premium is
calculated
The sum charged per unit of exposure by which the premium is
calculated
Reinstatemen The making good of damaged property, the restoration of the sum
t
insured
The making good of damaged property, the restoration of the
After
sumsettlement
insured of a loss on payment of an additional premium
After settlement of a loss on payment of an additional premium
Reinstatemen
t of sum
The restoration of the sum insured after it has been reduced through the
insured
payment
The restoration
of a claimof the sum insured after it has been reduced
through the payment of a claim
Reinsured
An insurer or reinsurance company that accepts contracts of reinsurance
An insurer or reinsurance company that accepts contracts of
Reinsurer
reinsurance
An insurer or reinsurance company that accepts contracts of reinsurance
Replacement
Cost
The
An value
insurer
of property
or reinsurance
as indicated
company
by thethat
current
accepts
purchase
contracts
price ofofa
similar
reinsurance
article
Retention
limit
The
Themaximum
value of liability
property
that
asan
indicated
insurer wishes
by the
tocurrent
keep forpurchase
his own account
price
inofrespect
a similar
of aarticle
particular risk
Risk
The maximum liability that an insurer wishes to keep for his own
a)
account
A situation
in respect
that cannot
of abe
particular
controlledrisk
or perfectly foreseen;
b) The subject matter o an insurance contract
Schedule
The
a) A
listsituation
of personal
that
details
cannot
of the
be insured
controlled
and or
theperfectly
subject matter
foreseen;
of the
insurance
b) The subject
policy matter o an insurance contract
Short term
insurance
The list of personal details of the insured and the subject matter
Insurance
of the insurance
that operates
policy
on a year to year basis, and which may be
terminated by the insurer or the insured
Subrogation
The
Insurance
right of one
thatparty
operates
to stand
onin
aa
year
place
toofyear
another
basis,
and
and
take
which
up the
may
latter’s
be terminated
legal rights
byagainst
the insurer
a thirdor
party
the insured
Sum Insured
Third party
Third party
insurance
The monetary limit of the insurers liability under a policy
The right of one party to stand in a place of another and take up
the latter’s legal rights against a third party
A person who is not a party to a contract
Motor
The monetary
insurance cover
limit providing
of the insurers
compensation
liabilityfor
under
injuryato
policy
third parties
and damage to their property
A person who is not a party to a contract
Motor insurance cover providing compensation for injury to third
parties and damage to their property
10369 – Learner Study Guide
Third party
fire and theft
2016/03/08
Page 44 of 45
Third party insurance, plus cover for fire damage to, and he theft
of, the insured’s own vehicle
Third party
fire and theft
insurance
(motor)
Third party insurance, plus cover for fire damage to, and he theft of, the
insured’s own vehicle
Treaty
reinsurance
A contract between an insurer and a reinsuring company under which the
former agrees to give the reinsurer aggress to accept reinsurance for
risks falling within the terms of the agreement.
Under
insurance
Insurance for a sum insured less than the value at risk
Underwriter
An insurer, a person who makes decisions on whether or not to accept
insurance business
Underwriting
The process of assessing a proposal for insurance to decide on the
acceptability, and if so, on what terms
Valuations
A list of property with values allocated to each item as the basis of
insurance
Warranty
A condition that must literally be complied with
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2016/03/08
Page 45 of 45