Even with information never being further away than your smartphone, many consumers will still believe what they read in unofficial groups or hear from friends and family about insurance.
From our homes to our cars and livelihoods, insurance is meant to safeguard the things that matter to us most. However, many South Africans still misunderstand what that protection really includes. “These misconceptions around cover can create a false sense of security, only to surface as costly surprises when you need to claim,” says Ryno de Kock, head of distribution at PSG Insure.
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These are the biggest insurance myths to forget about unless you are warning other consumers about them:
Business insurance is only for large companies
Many small business owners believe insurance is only necessary or affordable for larger corporates. However, smaller operations often face greater vulnerability to risks such as theft, fire, cybercrime, or employee fraud, because they may lack the resources to recover quickly or safeguard against these issues. Adding to this, De Kock says the cost of a single incident could outweigh the cost of tailored cover.
“Business insurance solutions are scalable and can be designed around a specific risk profile, ensuring that even smaller start-ups have access to protection that keeps trading going. Working with a qualified insurance adviser can really help to identify tailored cover solutions.”
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Homeowners insurance covers everything inside the house
Homeowners insurance is often confused with household contents insurance, De Kock says. Homeowners cover applies to the physical structure of a property, the walls, roof and fixtures, while household contents insurance covers your possessions inside, such as furniture, electronics and clothing.
“Another common misconception is that insurers cover damages caused by mould, damp or gradual wear and tear. These are generally excluded because they are the result of poor maintenance rather than sudden, unforeseen events which insurance is designed to safeguard against,” De Kock says.
To avoid surprises at claim stage, an insurance adviser can provide you with upfront advice in terms of what each policy will cover and will specify what is your responsibility to maintain to have a successful claim.
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Car insurance premiums depend on the colour of the car
Some people believe that your premium will be higher if the car you buy is in a colour generally associated with sports cars, but De Kock asserts that insurers do not use the colour of your car to determine the driver’s risk rating.
“Premiums are determined by risk-based data such as the make and model of the vehicle, repair costs, safety features, where it is kept overnight and your driving history.”
Similarly, while age does influence risk calculations, young drivers are statistically more likely to be involved in accidents but it is only one of many variables considered. Myths like these can prevent motorists from shopping around for cover that accurately reflects their risk profile.
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Insurance is too expensive
“Many people assume that insurance is a luxury rather than a necessity but in most cases the cost of going without cover is far higher than paying a monthly premium. Whether it is replacing a stolen vehicle, repairing storm damage, or covering legal fees from a liability claim, insurance prevents sudden shocks from derailing finances,” De Kock says.
Affordability also depends on tailoring a policy and an adviser can help you to balance cover in your budget and highlight opportunities for cost-savings, such as adjusting excess levels or bundling personal policies.
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Advisers just add to the cost
De Kock says another misconception is that working with an adviser is unnecessary or will make insurance cover more expensive. In fact, he points out, advisers often save money for their clients by helping them avoid underinsurance, duplicated cover, or paying for benefits they do not need. They also provide valuable guidance when navigating complex products such as cyber insurance or fidelity cover for businesses.
Many of these insurance myths persist because they are based on outdated information or confusion between different types of cover, De Kock says.
“Rather than relying on inaccurate assumptions that can leave dangerous gaps in your protection, understand what policies include, address any exclusions and work with a trusted adviser who can separate fact from fiction.”
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