If your used underwear or toothbrush is stolen you do not have to worry that your insurer will replace it with secondhand underwear and a used toothbrush, because the basis of cover for house contents is “new for old” with all the insurers we deal with. This means that
[A] The insurer is obliged to replace items with
exactly the same [or, if not available on the market, nearest equivalent] brand new items,
[B] The client is obliged to insure items for the price of
exactly the same [or, if not available on the market, nearest equivalent] brand new items.
As you can see, the obligations are the same as far as values are concerned. So the question you must ask yourself is: “What will it cost my insurer to replace [1] my buildings or [2] everything in my house in the event of a total loss by fire?”
If you do the exercise to determine these amounts, at least annually, and insure for the totals, your insurer will be obliged to repair damages to your buildings, or replace everything in your house with brand new items, at the time of a loss.
EFFECT OF UNDER-INSURANCE
If you insure your house contents for R100000 but, at the time when you suffer a burglary loss, it turns out that the actual new replacement cost is R200000, then you have only taken up insurance for 50% of the real risk. If the cost to replace the stolen items is R15 000, the insurer will pay only 50% namely R7 500.
Remember, buildings and house contents are the ‘cheaper’ risks. Therefore, being under-insured results in insignificant savings and disproportionate losses in the event of even a small claim.
Wednesday, August 20, 2008
IMPORTANCE OF PUBLIC LIABILITY INSURANCE
An accident that causes injury or death can have disastrous consequences for the person responsible. If you are held personally liable, insurance may be the only thing protecting you and your dependants from bankruptcy.
For example, a 38 year old farmer was RECENTLY paid R10 million after suffering severe brain damage following an accident. The original claim amounted to R20 million. There is also currently a claim against the Road Accident Fund by a Swiss national for R60 million. Given the increasing value of liability settlements handed down by South African courts, policy holders should buy the highest liability cover that they can afford. Limits of up to R30 million are available at surprisingly cheap premiums.
Massive liability does not only attach to instances of damage to life and limb. Property damage has the potential for huge liability as well. For example, if you are responsible for a fire that spreads to a parking lot, or an adjacent building, or an electrical installation, the repercussions can be enormous. [From an article in the FA News Online Newsletter 17/4/2008]
For example, a 38 year old farmer was RECENTLY paid R10 million after suffering severe brain damage following an accident. The original claim amounted to R20 million. There is also currently a claim against the Road Accident Fund by a Swiss national for R60 million. Given the increasing value of liability settlements handed down by South African courts, policy holders should buy the highest liability cover that they can afford. Limits of up to R30 million are available at surprisingly cheap premiums.
Massive liability does not only attach to instances of damage to life and limb. Property damage has the potential for huge liability as well. For example, if you are responsible for a fire that spreads to a parking lot, or an adjacent building, or an electrical installation, the repercussions can be enormous. [From an article in the FA News Online Newsletter 17/4/2008]
ASPECTS COVERED BY A COMMERCIAL POLICY
Depending on the sections taken up, commercial insurance covers business risks such as
[a] fire, storm, flood, earthquake, lightning damage to commercial buildings, contents of such buildings, plant and equipment [except computers and laptops];
[b] fire, storm, flood, earthquake, lightning damage and loss due to theft, of office contents [except computers and laptops], including loss of documents and plans which may lead to a claim against the policy holder [a plan is destroyed in a fire and a building contractor sues the insured for loss of his turnover due to the delay caused by redrafting those plan];
[c] loss of profits when a business comes to a standstil as a result of fire, storm, flood, earthquake, lightning damage;
[d] theft of business assests by an outsider from the insured risk address, if [b] is not taken up;
[e] money stolen by an outsider from the business premises;
[f] shopfront window glass for which the insured may be responsible even if the premises do not belong to the insured;
[g] fidelity cover when a loss is suffered due to an insider, i.e. the dishonesty of an employee, a partner or a director of the business;
[h] loss or damage to goods in transit due to fire, collision and/or theft;
[i] business all risks - loss or damage to valuable items taken away from the insured risk address regularly, such as cellphones, handheld computers, memory sticks, financial calculators, tools, and any piece of equipment used at sites;
[j] accidental damage to an expensive piece of equipment which is not specified and not already covered in terms of [i] above;
[k] public [outsider] liability, when the insured is held liable for damage or injury to a member of the public [example: an estate agent’s heavy billboard sign falls off it’s frame, for whatever reason, and flattens a car parked below the billboard – this is covered], the insurer will deal with the claim and the legal costs as well, but excluding cover if damage or injury was caused in the course of the insured’s business or profession [example: a tree felling service chops down a tree, it falls over and flattens a car parked nearby – this is not covered as it is due to the insured’s own incompetency];
[l] employer’s [insider] liability, when the insured is held liable for damage or injury to an employee, the insurer will deal with both the amount claimed and the legal costs involved;
[m] group personal accident, covering the costs of employees’ injuries with no questions asked about who may be responsible, in the same way as a medical aid;
[n] electronic equipment, covering loss of or damage to computers and laptops, reinstatement of data, costs to rectify incompatibility following repair or replacement of computers/laptops. If this section is taken up, fax machines, printers, scanners can be added to the section and deleted from any other section to avoid duplication of insurance;
[o] motor traders, covering only their own or their clients’ losses as well, at their premises or while a car is taken on a test drive away from their premises;
[p] machinery breakdown, when income is dependent upon a specific piece of machinery, cover can be arranged for the lease of an alternative piece of machinery and even for the loss of profit as a result of the mechanical breakdown of that piece of machinery;
[q] stock deterioration covers losses due to electrical failure [but there are limits, meaning that the failure must be due to an accident, not to the unavailability of electricity and it must last longer than 24 hours];
[r] motor losses – damage to or theft of vehicles, the insured is also indemnified against claims made by the public in case the driving of the insured car causes damage to another vehicle and, finally, there is no limit on who drives a commercial vehicle as long as he/she is legally licenced.
[a] fire, storm, flood, earthquake, lightning damage to commercial buildings, contents of such buildings, plant and equipment [except computers and laptops];
[b] fire, storm, flood, earthquake, lightning damage and loss due to theft, of office contents [except computers and laptops], including loss of documents and plans which may lead to a claim against the policy holder [a plan is destroyed in a fire and a building contractor sues the insured for loss of his turnover due to the delay caused by redrafting those plan];
[c] loss of profits when a business comes to a standstil as a result of fire, storm, flood, earthquake, lightning damage;
[d] theft of business assests by an outsider from the insured risk address, if [b] is not taken up;
[e] money stolen by an outsider from the business premises;
[f] shopfront window glass for which the insured may be responsible even if the premises do not belong to the insured;
[g] fidelity cover when a loss is suffered due to an insider, i.e. the dishonesty of an employee, a partner or a director of the business;
[h] loss or damage to goods in transit due to fire, collision and/or theft;
[i] business all risks - loss or damage to valuable items taken away from the insured risk address regularly, such as cellphones, handheld computers, memory sticks, financial calculators, tools, and any piece of equipment used at sites;
[j] accidental damage to an expensive piece of equipment which is not specified and not already covered in terms of [i] above;
[k] public [outsider] liability, when the insured is held liable for damage or injury to a member of the public [example: an estate agent’s heavy billboard sign falls off it’s frame, for whatever reason, and flattens a car parked below the billboard – this is covered], the insurer will deal with the claim and the legal costs as well, but excluding cover if damage or injury was caused in the course of the insured’s business or profession [example: a tree felling service chops down a tree, it falls over and flattens a car parked nearby – this is not covered as it is due to the insured’s own incompetency];
[l] employer’s [insider] liability, when the insured is held liable for damage or injury to an employee, the insurer will deal with both the amount claimed and the legal costs involved;
[m] group personal accident, covering the costs of employees’ injuries with no questions asked about who may be responsible, in the same way as a medical aid;
[n] electronic equipment, covering loss of or damage to computers and laptops, reinstatement of data, costs to rectify incompatibility following repair or replacement of computers/laptops. If this section is taken up, fax machines, printers, scanners can be added to the section and deleted from any other section to avoid duplication of insurance;
[o] motor traders, covering only their own or their clients’ losses as well, at their premises or while a car is taken on a test drive away from their premises;
[p] machinery breakdown, when income is dependent upon a specific piece of machinery, cover can be arranged for the lease of an alternative piece of machinery and even for the loss of profit as a result of the mechanical breakdown of that piece of machinery;
[q] stock deterioration covers losses due to electrical failure [but there are limits, meaning that the failure must be due to an accident, not to the unavailability of electricity and it must last longer than 24 hours];
[r] motor losses – damage to or theft of vehicles, the insured is also indemnified against claims made by the public in case the driving of the insured car causes damage to another vehicle and, finally, there is no limit on who drives a commercial vehicle as long as he/she is legally licenced.
SHORT DESCRIPTION OF A DOMESTIC POLICY
Usually referred to as PERSONAL LINES insurance, this covers private assets such as dwellings, household goods, valuables that are taken away from the home regularly such as laptops, cellphones, bicycles, jewellery and vehicles used for social purposes, including to and from work. Limited business use of vehicles, for instance calling on a client say twice a week can also be covered. The cover comprises –
[a] damages to dwellings due to fire, storm, flood;
[b] damage or loss of household goods due to fire, storm, flood or theft;
[c] loss of, or damage to valuables away from home;
[d] damage to or theft of vehicles;
[e] the insured is also indemnified against claims made by the public in case the driving of the insured car causes damage to another car; and
[f] the insurer indemnifies the policy holder against claims which a member of the public may make against the policy holder, in case the policy holder should be the cause of damage or injury to a member of the public. However, damages or injuries caused in the course of one’s profession is not covered in terms of a personal lines policy.
Usually one or more or all of the above sections can be taken up and emergency roadside assistance following mechanical breakdown or a flat tyre is included.
[a] damages to dwellings due to fire, storm, flood;
[b] damage or loss of household goods due to fire, storm, flood or theft;
[c] loss of, or damage to valuables away from home;
[d] damage to or theft of vehicles;
[e] the insured is also indemnified against claims made by the public in case the driving of the insured car causes damage to another car; and
[f] the insurer indemnifies the policy holder against claims which a member of the public may make against the policy holder, in case the policy holder should be the cause of damage or injury to a member of the public. However, damages or injuries caused in the course of one’s profession is not covered in terms of a personal lines policy.
Usually one or more or all of the above sections can be taken up and emergency roadside assistance following mechanical breakdown or a flat tyre is included.
ALL RISKS INSURANCE EXPLAINED
While the Household Contents Section on a personal [domestic] policy covers all moveable assets against fire, storm, flood and theft losses at the specified risk address [and the premium is based on that risk area and the security measures in place at that risk address], the All Risks Section covers the same losses, as well as accidental damage with respect to items insured under the All Risks section, anywhere in the world. All Risks cover is available as an extension of the Household Contents Section for –
UNSPECIFIED PERSONAL EFFECTS, which can generally be defined as items carried on and by the person. This would include the clothing, jewellery and the watch you wear and the handbag or baseball bat you carry when you leave the risk address. Or the suitcase full of clothing you take with you on a weekend away. Should you take up unspecified all risks cover for an amount of R5000, for instance, then it would mean that you have R5000 cover per incident, but a maximum of 25% of that sum per unspecified item lost in the incident. This percentage per item varies from insurer to insurer, but is a good example of the average. Therefore, should a watch worth R10 000 be stolen in the incident, the maximum you would be able to claim for that watch would be 25% of the R5 000 cover you elected for unspecified all risks cover. To provide full cover for more expensive items, such as this example watch, you can extend cover to
SPECIFIED ALL RISKS, and under this section you specify an item for the current new replacement cost of that item. If the watch is specified for R10 000, you will pay a premium for this watch and you will be paid the replacement value of the watch unless you insured it for less than the replacement value, in which event only the amount you insured it for will be paid.
There are certain ‘motor only’ type policies to which all risks cover can be added, but in all other cases it can only be added to a policy where the Household Contents section had been taken up.
Please do not hesitate to call us on 021 712 1385 should you require a quote for the extension of your policy to included all risks cover.
ETIENNE & ANTHEA de VILLIERS
UNSPECIFIED PERSONAL EFFECTS, which can generally be defined as items carried on and by the person. This would include the clothing, jewellery and the watch you wear and the handbag or baseball bat you carry when you leave the risk address. Or the suitcase full of clothing you take with you on a weekend away. Should you take up unspecified all risks cover for an amount of R5000, for instance, then it would mean that you have R5000 cover per incident, but a maximum of 25% of that sum per unspecified item lost in the incident. This percentage per item varies from insurer to insurer, but is a good example of the average. Therefore, should a watch worth R10 000 be stolen in the incident, the maximum you would be able to claim for that watch would be 25% of the R5 000 cover you elected for unspecified all risks cover. To provide full cover for more expensive items, such as this example watch, you can extend cover to
SPECIFIED ALL RISKS, and under this section you specify an item for the current new replacement cost of that item. If the watch is specified for R10 000, you will pay a premium for this watch and you will be paid the replacement value of the watch unless you insured it for less than the replacement value, in which event only the amount you insured it for will be paid.
There are certain ‘motor only’ type policies to which all risks cover can be added, but in all other cases it can only be added to a policy where the Household Contents section had been taken up.
Please do not hesitate to call us on 021 712 1385 should you require a quote for the extension of your policy to included all risks cover.
ETIENNE & ANTHEA de VILLIERS
Subscribe to:
Posts (Atom)