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NO POLICY COVERS EVERYTHING (PART 2)

In part two of “no policy covers everything”, we are going to explore some of the common uninsurable events and exclusions that often raise their head.

Some Common Uninsurable Events or Exclusions
On a high level, all reputable insurance companies select their clients and charge premiums, based on the clients risk profile.

Your risk profile is demonstrated in the way you take care of your assets (usually called “Reasonable Care” in the policy), in your claims records, in how profitable you are to insurers, in how thoroughly you read contracts before you enter them, on how well you keep your promises, on how well you maintain your assets, on how well you secure your premises, on how well you mitigate your overall insured risk etc.

If you manage your risk profile well, it is very likely your claims and premium will reduce and in the long run, you will understand and crucially, be far less exposed to the following common uninsurable events or exclusions
• Accidental in Nature…

The cause of your loss must be sudden and unforeseen.

Losses which are inevitable, foreseeable, intentional or deliberate are not insurable – e.g. maintenance or wear and tear is inevitable (in insurance policies they often call this exclusion “loss caused by a gradually operating cause”)

• Public Policy and Compliance with Law…

Insured events are never contrary to the law or to what the public at large deem to be right and moral. In other words, fines, criminal acts, unlawful acts etc. are not insurable.

Conversely, the policy will directly or indirectly require you to comply with the laws of the land and if you fail in this, it is likely your claim will not succeed e.g. you must hold a valid license to drive a vehicle, your car must be roadworthy, you must comply with building regulations, you must comply with gas-electrical-plumbing installation regulations etc.

• Identifiable Events…

Something must have actually happened. Events like disappearance, phantom losses, a machine that just stops working without a determinable and insured cause, etc. are not insurable events.

• Proof of the Cause of Loss, Ownership and the Amount…

Insured events, where you cannot prove what caused the loss, ownership or where you cannot substantiate the amount claimed for, are excluded

• Legal Interest in the Insured Asset Claimed for…

Any insured events, where you don’t have a legal interest in the asset claimed for (either by way of ownership or a responsibility created by contract e.g. a hire purchase agreement) are not insurable. This insurance principle is commonly referred to as an “Insurable Interest”

• Defect in Design or Construction…

Insurance companies are not in the business of guaranteeing a product’s performance or that construction is free of defects. These risks are uninsurable and must be carried by the manufacturer, builder, retailer etc.

• Some Other Examples of Uninsurable Risks are…

War, Bad Decisions, Transactional Risks, Currency Fluctuation and Pre-Existing Damage
AIB Cape Plays a Key Role

As your broker, AIB Cape has got your back. We do our very best to ensure that you make an informed insurance choice at all times, that your premium is competitive (based on your risk profile), that your insurance is placed with a reputable insurer and that we consistently provide you with professional insurance advice and service.

AIB Cape also holds insurers to account at claims stage, by ensuring they pay your claim swiftly and fairly in terms the policy contract.

In Closing

In the final analysis, you would be well advised to remember that no insurance policy will cover everything – there always will be uninsured events and exclusions in your policy, but if you keep your promises and make an effort to check and understand your policy, your insurer will honour their promise to pay you, when insured events happen.

As always, AIB Cape remains at your service.

November 12, 2019

Posted In: Newsletters

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NO POLICY COVERS EVERYTHING – part 1

In this first part of “no policy covers everything”, we are going to deal with three “inconvenient truths” about insurance.

Inconvenient Truth One:
Before You Buy Insurance

Before you purchased insurance through AIB Cape, you would have been asked many questions and sometimes we asked you to complete a proposal form on behalf of the insurer. In addition to answering these questions accurately and truthfully, you would also have told your insurer (via AIB Cape), everything you thought they should know about your risk, even if they may not have asked a specific question about something.

This is called the duty of Disclosure and is an ongoing duty, as a policyholder. Put another way, when you initiate a policy or if your risk changes in any way during the currency of your policy, full disclosure is required – this is a permanent promise you make to your insurer.

It is important to be mindful of the fact, that these documented promises and disclosures you made and continue to make about your risk, directly impact on your policy cover and the premiums you pay and ultimately, the insurance companies’ acceptance of your risk.

For example, you may have promised to set your alarm, to pay an excess, to have an operational immobilizer, that you had no claims with your previous insurer, that you park your vehicle in a locked garage overnight and so on and so forth.

You, also, always make the promise to pay your premium on time.

Inconvenient Truth Two:

After You Buy Insurance

After you have bought insurance via AIB Cape, you would have received a written promise from your insurer stating that they will pay you, if certain things happen, providing you keep the promises you have made – this written promise is evidenced in the form of a policy.

The policy also tells you in detail what they will not pay for.

One of the most important things you can do when you receive your insurance companies promise (the policy and schedule) is to read it carefully, check that all the detail is correct and vitally, make sure you understand it – there are no shortcuts here and this applies every time you endorse your policy or renew it. If you do not understand anything, give us a call or send an email and we will assist you.

If you don’t do this, you will have an unrealistic expectation of how your insurer will respond at claim time.

Inconvenient Truth Three:

Insurance Companies Want To Pay Your Claims and Make a Profit

The good news is that reputable insurance companies actually want to pay your claims quickly and fairly, provide good service at a reasonable price and make a profit. That is how they stay in business.

What they don’t want, is to get embroiled in disputes with their clients – this is both expensive and unfriendly (reputable insurers truly value their customers).

However, they can’t simply forget about exclusions and what is covered in the insured events because that is not what they promised when you purchased their product and if you think about it, to pay more than what they promised would be tantamount to a gift and would be a bad business practice, which effectively would put them out of business.
AIB Cape Plays a Key Role

As your broker, AIB Cape has got your back. We do our very best to ensure that you make an informed insurance choice at all times, that your premium is competitive (based on your risk profile), that your insurance is placed with a reputable insurer and that we consistently provide you with professional insurance advice and service.

AIB Cape also holds insurers to account at claims stage, by ensuring they pay your claim swiftly and fairly in terms the policy contract.

In Closing
In the final analysis, you would be well advised to remember that no insurance policy will cover everything – there always will be uninsured events and exclusions in your policy, but if you keep your promises and make an effort to check and understand your policy, your insurer will honour their promise to pay you, when insured events happen.

Part two to follow shortly.

As always, AIB Cape remains at your service.

November 5, 2019

Posted In: Newsletters

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