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I don’t know about you but to me it is very difficult to understand all the terminology and clauses that I have to familiarize myself with when taking out insurance. The problem is however that if I don’t understand and familiarize myself with the definitions and clauses it may happen that I fail to comply with important conditions that may have a negative effect on a claim. Given this I thought it valuable to look at a few important clauses and definitions regarding short term insurance.
Firstly it is important to note that when you take out short term insurance there are two very important documents which you receive. The first is the Schedule of Insurance and secondly it the Policy Wording document.
The Schedule of Insurance sets out what is ensured and for what amounts. On this document it is important to familiarize yourself with the security requirements regarding household contents. If you stated that you live in a security complex the insurance company may wave certain requirements i.e alarm systems or burglar gates. However, if the type of security complex have not been described in detail, or if you misrepresented some information it may lead to a claim being rejected once the assessor visited the property. The Schedule of insurance will stipulate what security measures are required, should you have burglar proofing in front of windows and doors, is an alarm required, should the alarm be connected to a response company etcetera.
The Schedule of Insurance also sets out the amount for which an asset has been insured. It is of utmost importance to check the description of your vehicle and the amount it is insured for. The term retail is a widely used term yet may have different definitions with different insurance companies. Also remember that the value of your vehicle reduces over time and the insurance company will only pay out the retail value although you may be paying premiums for an inflated value. That is why it is important to review your insurance annually. Clients also forget to specify extras on a vehicle. If you fitted the vehicle with anything that does not come standard i.e a special radio, bull bar, canopy or a tow bar then these need to be specified or else the insurance company will not cover the cost of replacement.
The second document is the Policy Wording document. Now this is a document no-one ever reads, yet when we have a claim we call on ignorance as our defense. The fact is however that whenever a policy is issued the policy holder receives a copy of this document which gives the definitions of all the relevant terms.
One term which comes to mind is unattended vehicles. If you have valuables laying in your car on the back seat and someone breaks into your car and steals the valuables you will not be insured yet if these articles where locked unsighted in the trunk of the car it will be insured in case of a break in. This may sound very petty but from an insurers point of view you increased the risk of loss by keeping the valuables in sight of anybody to see. These types of things are described in the Policy Wording document.
It is very important that we familiarise ourselves with the terms of our insurance contract and the meaning our specific insurance company gives to these terms. These are described in detail in these two documents. I always new there was reason why they issued these documents. Now I know it isn’t for lighting a fire.
Till next time!
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