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MONEY BASICS
with MARTIN HESSE
INSURANCE TERMS YOU NEED TO KNOW A MAJOR reason people shy away from financial issues is the wide use of terms that only financial experts and lawyers understand. In insurance, the more you know about how it works, the concepts behind it and the terms used, the less likely you are to lose out, either through paying too much, or by having a claim rejected. Here are explanations of
some common legal terms and concepts in insurance. ACT OF GOD Any incident that is not manmade, which causes destruction to property or injury or death to people or animals. Examples are storms, earthquakes, lightning and tsunamis. AVERAGE
You are required to insure your
assets at their full value. Under the “average” clause, if the replacement value of the items is more than you have insured them for, your claim will be reduced in proportion to how much you are under-insured. For example, if the contents of your home is insured for R200 000 but valued at R400 000, it is insured for half its value. Therefore, each time you claim for loss or damage, the insurer will pay out only half of the value of the claim.
