Under Insurance and Major Uninsured Risks
When reviewing your insurance it is of course important that the focus is on doing things in a proper and thorough manner not just on price. We also understand that all of the jargon and complexities of insurance can become overbearing or often just too hard with our busy everyday lives.
To assist with this we have selected two of the areas for you to carefully consider in your insurance program to help give you an insight into a few important areas of insurance.
Under Insurance (Average Clause)
Under-insurance is in simple terms not selecting a sufficient sum insured or amount of insurance coverage. At the time of a claim you can sometimes find that an insurer may evoke an under-insurance or average clause in a policy wording which in effect can have you deemed to be partially self insured of all such claims or losses.
For example by having an inadequate sum insured for your Home & Contents Insurance you may find that if a claim is made and the sum insured on the policy is less than the deemed insurable value of the insured property then the insurer is entitled to only pay the claim to the proportion that you were in fact insured. You could therefore effectively become your own Insurer for the excess, plus a proportionate amount of the claim.
For example : Your home/building is insured for $200,000 and replacement value is $400,000.
You have a $20,000 claim and as you have only insured 50% of your home's value your claim is settled for $10,000.
Major Uninsured Risks (Non-Insurance)
When you hear the term Uninsured Risk or Non-insurance this if you elect not to insure a particular risk, such as not to insure a particular motor vehicle you own due to its age and value or to only insure it for Third Party Only Damage then you must stand all such related losses yourself.
Our concern lays not in the fact that you may retain and self insure certain risks, but that you may do so without fully recognising this. You may also not be fully aware of the options and products available to insure or tailor the cover for certain areas of your business or personal assets. These decisions should also be reviewed from time to time in the light of your ever changing circumstances.
An area of further concern is the possibility of the total aggregation of self-insured risks which, in the event of an incident can give rise to a variety of claims. This can sometimes lead to a combined loss figure well above the intended acceptable level of your self insured retention. This can have catastrophic effects to your cash flow.
For example: If you have a business and suffer a fire or explosion at a major location this could involve Fire, Business Interruption, Motor Vehicle Insurance claims as well as damages to Customers goods and Legal Liability. Large claims such as this can also often then incur Liability &/or Workers Compensation claims for injured workers or third parties).
With all of this in mind it makes it ever important to use a broker that you have confidence in and can be assured that they understand all of the differing types of risks & exposures that your business or your family may have. This allows you a thorough risk management plan and gives you an understanding of your risks so that you can make informed decisions.
Whilst it is not ever our intention to push policies onto customers we at Competitive Insurance Solutions believe that it is important that these issues are discussed before a loss occurs and it is too late. If you understand what is available and can set an insurance program around your budget and your comfort levels it gives a much better mutual understanding as to what is covered and what can be claimed for. It is also part of giving you piece of mind during both your personal and business lives that you are getting value for money from both your Insurer and your Insurance Broker.