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(or the clients’ attitude towards risk).
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 your 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 not contrary to the law or what the public at large deems to right and moral e.g. 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 etc.
• Identifiable Events… Something must have actually have happened. Events like disappearance, a machine that just stops working without a determinable cause, phantom losses etc. are not insurable events
• Proof of the Cause of Loss, Ownership and the Amount…Any insured event where you cannot prove what caused the loss, ownership and 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 products performance or that construction is free of defects. These risks are uninsurable and must be carried by 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 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.