All or nothing

Review the terms and conditions of insurance policies before you take the plunge.

There is a whole book with the myths surrounding insurance. The majority of this can be traced back to insurance companies that claim that all is covered, intermediaries that leave more to be previously stated, and us the customers and consumers, not performing the proper research by asking questions or examining the small details.

There are global initiatives that have sought to streamline the meaning used in the law, especially as it relates to the everyday person.

The Plain English movement, or the Plain Language movement, emphasises that contract language must be easy to comprehend by the people who it binds. It began as a reaction to the issue that the language which the laws of the land are written isn't easy and clear enough for the average person that it was designed to protect. In the case of the business world, this change affects insurers the biggest.

Let's take a take a look at some of the intended or unintentional promises made by the insurance industry by technical phrases.

In our previous Cover Note instalment that Constructive Total Loss means a partial loss that must be paid in the same way as a complete loss as the expense of repair and recovery would be unsustainable. For instance, a sunken vehicle for instance. It was a matter of the word being negative, but actually referring to something that was not so bad for the person who was insured.

Loss-of-profit cover

This is a truly sad dilemma. For companies, there is a an extremely sophisticated and important insurance known as loss-of-profit insurance. Also known as consequential loss insurance it's offered on top of the regular fire insurance on plant and machinery. It covers loss of profit due to interruption in production because of a fire.

The sales, production and profits from the plant are considered in determining this policy. Likewise, any loss are made available for claim on a periodic basis until the plant is operating again and production is able to be resumed.

In the event that an accident causes the destruction of a factory the policy on fire will pay to rebuild it, and replace or repairing the equipment, and the loss-of profit policy will compensate for losses for the impacted time.

But, if the plant is destroyed in part and some production lines are able to be operated even with a lower production, you cannot make a claim in the policy of consequential losses. It's like a case of nothing or everything.

"All or Nothing" applies to insurance for events also. It doesn't matter if it's mega events such as IPL matches, tennis grand Slam events, or a wedding celebration in your family, some basic ideas are similar.

One reason is that it's the actual loss of money in input costs that are paid for. Therefore, the costs of materials which are involved in the preparation for the event such as decor, venue, etc. are taken into consideration. The ticket money can be refunded through the insurance claim. However, the loss and profits are not taken into account. For personal occasions, the emotional stress or social repercussions of the an annulment of a wedding aren't protected.

In all cases the coverage of cricket matches is, for instance, a halt after the first ball has been taken!

All or Nothing

Then, it's all or nothing. In the case of personal events be aware that it's an insurance for weddings and no marriage insurance. An argument between spouses isn't insured!

Here's another Google that insurance companies bowl. For property insurance, such as for a property or goods that are in transit the average clause is applicable. It states that if, when the property is damaged that the property's value is less than its true value and the claim will also be less proportionally.

This is logical, however, it is very frustrating especially when you're on the other end. or, more specifically, the non-receiving side.

Let's end this installment of Cover Note on a positive note. A double indemnity clause is .... precisely what it declares!

Life insurance policies that has an amount assured of Rs1 lakh will pay you 2 lakh in the event of a death by accident. The majority of times, the added amount is not much.

Be aware of these hidden gems in fine print, and take advantage of the advantages of being a savvy purchaser of insurance.