Short term insurance refers to a policy that provides risk cover against
loss, damage and liabilities. A monthly or yearly premium is paid to an insurance
company for this policy who compensate you for any losses suffered on the insured
objects.
The short term insurance premium is set by the insurance company and is calculated
using data like gender, age, location, security measures, type of item, value of
item, credit rating and claims history. This data allows the insurer to determine
your risk to them and they then set your premium accordingly. The higher the risk
the higher your premium will be.
Insurance companies usually charge higher premiums for short-term insurance policies
than long term insurance policies because they need to recover administrative and
processing costs over a shorter period. The trend for people to only take out a
short term insurance policy during times when risk is the greatest also contributes
to higher premiums.
Short term insurance policies typically provide cover for the following:
- Contents Insurance
- Building Insurance
- All Risks Insurance
- Motor Insurance
- Watercraft Insurance
- Personal Liability Cover
- Personal Accident Insurance