“Comprehensive cover in under a minute” and “A quote in 90 seconds and no need to speak to a call centre.” These are some of the boasts made by new online insurers selling comprehensive car insurance and cover for household contents to a market that’s increasingly tech savvy and hard pressed for time. 

But is it safe to buy insurance online or via an app, in a process involving no engagement whatsoever with a human being?

Christelle Colman, an insurance expert at Old Mutual Insure, says it’s very safe to buy “personal lines” insurance online in South Africa, given the tight regulation of financial services providers. 

Personal lines insurance is insurance against loss or damage to your personal property, which Colman says is “not a complicated matter”. 

Online portals and apps are usually user-friendly and clear about the excesses that apply, as well as the cover, she says. 

At the time that cover is sold to you, the insurer must disclose to you the most important exclusions, and provide you with your policy document within 30 days of the online transaction, she says. 

Colman says that while new players on the market may have innovative tools and services, ensure that you buy from reputable insurers only.

“The same rules apply as with an intermediate or call centre channel. The reputation in the market of the insurer is the most important factor to consider. The size of the insurer will ensure peace of mind when it comes to the settlement of claims,” she says.

But independent financial advisers say it’s not that simple. 

Trudy Luthuli, a certified financial planner and director of Luthuli Capital, says short-term insurance can be “tricky” if you buy it on your own, without the help of a broker or adviser.

When you buy insurance online, there’s a great chance of a mismatch between what you need and the product or the options you will end up selecting, she says.

An adviser has the expertise to assess your needs – by carrying out a financial needs analysis – and the suitability of the product to meet your needs.

Consider the difference between comprehensive car insurance and third-party cover. The latter pays out only for the damages caused by you to a third party, whereas comprehensive cover is far broader. “Buying the wrong one can be devastating at claim stage,” she says.

Then there is the question of cost versus value. Cost is what you pay, value is what you get. We all want good value for money.

Consumers often use comparison websites to pick a short-term insurer. But Luthuli says such comparisons are oversimplified and result in price being the main factor in your decision making.

You need to understand the benefits before you can decide whether it’s worth paying for or not. “A frequently overlooked add-on to car insurance is top-up cover or credit shortfall insurance. This covers you when your car is written off or stolen and the insurance pay-out is less than the amount still owing on the vehicle.”

Buying top-up cover will add to your premium, but you may need it. If you don’t know what it is and you aren’t offered it or prompted to take this cover, you could be prejudiced. 

Prem Govender, a certified financial planner, says that buying short-term insurance online often means forgoing the benefit of detailed explanations and the ability to ask questions around issues that may be unique to your specific circumstances. 

While buying insurance online has a place, you need to be aware of the potential pitfalls, she says. Consumers tend to rush through questions without appreciating the consequences of answering “negligently”.

Jason Julius, the head of asset protection at Gradidge-Mahura Investments, says you should proceed with caution when buying insurance online. “The current technology is unable to fully comprehend your needs and is therefore unable to provide suitable advice. The advice currently given online is mostly generic or superficial. If this type of advice  – or lack thereof – is accepted, the consequences could be far-reaching for clients.”

If you want to be sure that your insurance policy is suited to your needs, get advice from an expert, he says.

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