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Momentum Insurance Glossary



A sudden and unforeseen event.

Act of God

An event caused by the forces of nature.

Additional premium

The extra premium payable because of an endorsement.

All risks

An all risks policy covers loss or damage including accidental damage to the property insured. This form of insurance usually has very few specified exclusions.


The malicious and/or fraudulent burning of property.


A policy condition that states that if an asset or assets are underinsured, the person insured will be responsible for a rateable proportion of the loss.

Balance of third party

Third party liability cover as covered by a motor policy, excluding what is insured by the Road Accident Fund (or motor liability insurance that is compulsory in another territory).


An intermediary who acts on behalf of the insured in placing and servicing an insurance policy.


A complete termination of a policy before its term is due to expire. A cancellation clause in a policy allows the insurer or the insured to cancel after due notice.


An arrangement whereby two or more insurers enter into a single contract with the insured to cover risk in their agreed proportions.


The fee paid to a broker for the broker’s services and calculated as a percentage of the premium generated on the insurance policy. At present commission levels are capped by law and a broker may not be paid more than 12.5% of the premium on motor policies and 20% on other business.

Comprehensive Motor Vehicle Insurance

Insurance that covers loss of or damage to an insured motor vehicle (or motorcycle, caravan, trailer) arising from any accident, fire or theft. It also covers liability for bodily injury and property damage arising from motor vehicle accidents (Third-Party Liability).

Consequential loss

A financial loss incurred because of the damage to the property. For example, the cost of hiring a car after the insured vehicle is damaged and being repaired.


The policy of insurance. The agreement between the insurer and the insured.


The scope of the protection provided by an insurance policy.

Cover note

Confirmation of insurance cover.


Financial compensation claimed by a third party for loss, damage, or injury.


The extent to which property decreases in value due to use, and wear and tear. Values also reduce because of supply and demand, fluctuations in gold price etc.


A physical or mental condition that renders an insured person incapable of performing one or more duties of his or her occupation.

Duty of disclosure

The duty on the insured and the insurer to disclose every material fact in relation to the policy. See Uberrimae fidei.


Documentary evidence of a change to an existing policy, for example, change of address, increase in sum insured, etc. An endorsement may result in an additional premium, a return premium or no premium adjustment.


Clauses that exclude certain perils as being insured events. See Exclusion.


A policy condition whereby the insured is required to pay a portion of the loss, as stipulated in the policy (for example the first R2 000 of a motor vehicle damage claim). The insurer would pay the balance.


Provisions in a policy that exclude certain types of risk or property from being covered by the policy.

Ex gratia

Literally “an act of grace”. The insurer agrees to pay for an uninsured loss. If an insurer pays on this basis, he does not admit liability and he does not waive his right to defend his rights under the policy.

FIA - “Financial Intermediary Association of Southern Africa”

One of the associations of insurance brokers. It lays down a code of conduct for members.

Funeral insurance

A policy with a low sum assured intended to pay for the burial costs on the death of the insured. This can sometimes include family members.

Householders’ insurance

This covers loss or damage of household contents.

House owners’ insurance

This covers loss or damage to the buildings of a private residence.

Insurance policy

A contract whereby the insurer agrees to insure the insured in return for a premium.


The person whose interest is insured, usually the policy owner.


A person who negotiates contracts of insurance with the insurer on behalf of you (the insured).

Knock-for-knock agreement

An arrangement between some motor vehicle insurers whereby each will pay its own repair costs on a claim made. Each insurer agrees to forego recovery action against the other, irrespective of the question of fault, providing all the vehicles involved in an accident are insured with signatories to the agreement.

Limit of liability

The maximum amount for which an insurer is liable on any one loss. This is sometimes referred to as limit of indemnity.

Lloyds of London

An association of persons grouped together in syndicates providing insurance.

Loss adjuster

A person who investigates the circumstances of a loss and recommends the amount to be paid. Also known as loss assessor.

Material fact

A fact that would influence a prudent underwriter in determining the premium or other terms for a policy.


Information supplied by the insured to the insurer, which is incorrect to a material degree. The supply of such information, whether innocently or fraudulently, gives the insurer the right to repudiate the contract.

Motor vehicle insurance

Cover in respect of a vehicle that has a motor. This policy can include fire, theft, impact and collision damage and third-party liability cover.


The basis for liability insurance. It is the failure to act with the legally required degree of care for others. Also known as neglect.

New business

Policies written in response to application for insurance, as distinguished from renewal.

No claim bonus

The amount by which a renewal premium is reduced if the insured has not made a claim under the insurance policy for one or more consecutive preceding years. Applied particularly to comprehensive motor cover.


The failure to disclose material facts before entering into a policy.

Nuclear risks

By international agreement such risks are excluded from all policies.

Over insurance

Monetary limit exceeding the amount of the possible loss on a policy.


Possible loss occurrences or risks against which insurance cover is obtained, for example fire, windstorm, collision, hail, bodily injury, property damage, loss of profit, etc.

Permanent disability

Disability that prevents a person from working in his/her normal occupation. This may be total or partial (partial disability means “still able to work but not in the same occupation”).

Personal accident

A class of insurance that provides a fixed payment in the event of an insured being injured in an accident or killed in an accident. The amount paid varies according to the nature of the injury, for example, loss of a finger, loss of an arm.


The legal document, issued by the insurer to the policyholder, which outlines the conditions and terms of the insurance. Also called the contract.


A person who owns an insurance policy. Also known as the policy owner.

Policy schedule

The tabulated portion of a policy giving particulars of the policyholder, goods insured, sum insured, period of cover, excesses and similar information.


The monetary consideration that the policyholder pays to the insurance company for a contract of insurance.

Prescription period

A request for insurance form submitted to the insurer by or on behalf of the insured. The proposal form usually includes sufficient facts for the insurer to determine whether it wishes to accept the risk or not.

Proximate cause

The direct, dominant or specific cause of a loss or the uninterrupted chain of events that brought about the loss.

Public liability insurance

A class of insurance business covering liability exposure of individuals and businesses for damage to property and injury to individuals.

RAF - “Road Accident Fund”

A state insurer that provides compulsory third party liability insurance to motorists for bodily injury to third parties. The premiums are paid via a levy on petrol purchases.


The hazard of exposure or chance of loss. The term “Risk” is used also in a general way to designate the subject matter of an insurance policy. It may also be used as a generic term for the insured.

Risk management

Procedures and interventions used to minimise the possibility of loss.


The damaged goods taken by an insurer (usually for resale) on which the insurer has paid a total loss to the insured.

SASRIA - “The South African Special Risks Insurance Association”

This insurer provides cover against loss from political riot. This is a not-for-profit insurer.


A document forming part of the policy indicating the sum insured, premium period of insurance and applicable information.


An insured protects his/her own risk out of his/her own resources. This can be done via a risk financing arrangement.

Short-term insurance

Non-life, pension and investment insurance.

Sum Insured

The stated monetary amount or amounts of indemnity or cover under an insurance policy.

Territorial limits

The geographical area within which an insured event must occur in order for the insured to be covered in terms of the policy.

Third party cover (under motor vehicle insurance)

Provides legal liability cover for death, injury and damage to third party property involving the use of a motor vehicle.

Third party

Any person, not a party to the insurance contract, who has an alleged or actual right of action for injury or damage against the person insured under the policy.

Total loss

Loss entailing the payment of the total sum insured stated for the item under an insurance policy.

Uberrimae fidei (utmost good faith)

In all contracts of insurance it is a fundamental principle that the parties must exercise the utmost good faith towards each other. Any material fact that would influence the parties to the contract must be disclosed, otherwise there is grounds for voiding the policy. This applies to both intentional and innocent failure to disclose material facts. The test of materiality is whether that fact would have influenced a prudent insurer in his decision to accept the risk and the premium to charge. The test is considered in view of all circumstances at that time, including the full circumstances of the fact undisclosed.

Under insurance

The difference between the possible loss (greater amount) and the sum insured (lesser amount).


One who determines the acceptability or retention of insurance business and provides the cover. Loosely, the person involved in setting premiums. The term is also used to denote an insurance company.

War clause

By international agreement, insurers do not underwrite war risks.


A clause in an insurance contract presenting a condition relating to the degree of risk or non-compliance, which if not adhered to, invalidates the contract.

Momentum Insurance Company Limited is an authorised financial services provider (FSP 30414) and part of Momentum Metropolitan Holdings Limited.

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