Basics · 4 min read
South African insurance terms, explained simply
A plain-English glossary of the most-misunderstood SA insurance terms — from premium to repudiation.
Quick summary
Insurance is written in its own language. This glossary translates the 15 terms South Africans actually need to understand — premium, excess, sum insured, indemnity, retail value, repudiation and the rest.
Best for
- ·First-time policyholders
- ·Anyone reading a policy schedule
- ·People comparing quotes
Watch out for
- ·Confusing retail with market value (insurers default to market)
- ·Assuming 'sum insured' is what you'll get (it's the maximum, not the payout)
- ·Mistaking indemnity for full replacement
Frequent questions
- What's the difference between retail and market value in SA?
- Retail is the dealer asking price for the same make, model and year. Market value is the average between retail and trade-in, usually 10–15% lower. Insurers default to market — always request retail if you're financing.
- What does 'indemnity' actually mean?
- Indemnity is the principle that insurance restores you to the position you were in before the loss — not better. If your 5-year-old laptop is stolen, you get the value of a 5-year-old laptop, not a brand-new one (unless you have new-for-old cover).
- What is a 'cession'?
- A cession assigns the proceeds of a policy to a third party — usually a bank that financed your car or bond. If the car is written off, the bank gets paid first.
The core five
Premium — what you pay monthly. Excess — what you pay per claim. Sum insured — the maximum amount the policy will pay. Indemnity — the principle of being put back in the position you were in before the loss (not better). Repudiation — formal rejection of a claim.
Vehicle valuation terms
Retail value — the price you'd pay a dealer for the same model. Market value — the average between retail and trade-in. Trade value — what a dealer would offer for your car. Insurers default to market value unless you ask for retail. The difference can be R30,000+ on a 5-year-old car.
Policy mechanics
No-claim bonus — premium discount for going claim-free. Loading — extra premium for declared risk (young driver, modified car, prior claims). Endorsement — written change to your policy schedule. PMB — Prescribed Minimum Benefits, the 270 conditions every medical scheme must cover.
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