Many consumers only realise their insurance shortcomings after experiencing a loss.
Less than 30% of South Africans have adequate short-term insurance, which means that if their homes, home contents, or cars are damaged or stolen, they must bear the cost of the damage themselves.
Tando Ngibe, spokesperson for Budget Insurance, says the company is sounding the alarm: nearly one in three South Africans who submitted claims after household break-ins in the past year were not adequately insured, often discovering painful gaps in their cover when it was already too late.
“And while this points to household cover, the reality is that the same rings true for most short-term cover. In fact, research by Quantam recently indicated that 80% of consumers with short-term insurance are underinsured by more than 50% of the value of their assets.”
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Education is the missing link
Ngibe says education is still the missing piece where consumers are still largely uninformed when it comes to protecting their assets, with many only confronting the reality of their insurance shortcomings after experiencing a loss.”
This comes amid rising concerns around vehicle-related crimes and increasing misunderstandings about what constitutes adequate protection.
“Too many South Africans do not understand what constitutes adequate protection. For example, when it comes to vehicles, some consumers are under the false impression that warranties and service plans equal protection, but a service plan will not replace your car after it is stolen and a warranty will not help you if your car is hijacked or written off.”
Ngibe emphasises that the threat is real – and growing.
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Why short-term insurance is important
Budget Insurance’s internal data paints a stark reminder of the reason why insurance is important:
- Hijackings increased by 1% between 2023 and 2024;
- Vehicle theft, while down by 9%, remains dangerously high, with an average of 65 cars stolen per day in South Africa, according to Cartrack’s report for the third quarters of 2023 and 2024;
- The 13% drop in household break-ins suggests improving home security, yet 30% of those affected lacked sufficient cover.
“We are seeing encouraging growth in value-added products like warranties and service plans, and notably, we are also seeing fewer cancellations, which shows more consumers are thinking long-term.”
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Short-term insurance must be a priority
Ngibe is urging South Africans to review their cover, now, not after disaster strikes.
“Insurance needs to move from being an afterthought to an essential financial consideration. Understanding your cover is not just a box to tick, but a financial safety net that could determine whether you recover from a loss or not.
“In an increasingly uncertain environment, insurance must be seen as a proactive tool for financial resilience, not a grudge purchase. As lives, vehicles and assets grow in value, so too should your understanding of how to protect them.”
