How to Determine if Your Assets are Properly Covered by Insurance

Because we generally ensure that our most important assets are covered by insurance, we tend to naturally assume that our broader insurance needs are met. However, it’s critically important to have a thorough understanding of exactly what is covered by insurance, especially when it comes to your home and vehicle insurance policies. By doing so, you’ll know what you can claim for in the event of a loss – and also be aware of exclusions that may affect your claim.

Understanding Your Policy: Exactly What is Covered by Insurance?

It’s critically important to understand the terms – and limitations – of your insurance policies. You need to know exactly what you’re covered for and any potential exclusions that may exist. Insurance contracts can be necessarily complex, and it’s crucial to have a clear understanding of the terms and conditions. One of the most frequently misunderstood aspects of asset insurance is the principle of insurance itself. Insurance is a risk transfer mechanism which is designed to offset loss or damage to assets or property, with the primary objective of restoring the policyholder to the same or similar financial position they were in before a loss occurred.

How to Properly Evaluate Your Asset Insurance

To determine if your assets are properly covered by insurance, carefully review your policies, and consider the following factors:

Scope of Coverage and Claim Limitations

Make sure you thoroughly understand the types of coverage offered by your insurance policies, such as household insurance, insurance of other assets and personal property, and vehicle insurance. Be especially aware of factors that could lead to a dispute or rejection of claim in the event of a loss. This could include stipulations like these:

• Your household insurance policy may be contingent upon you having adequate theft prevention measures in place – like a functional alarm system – or ensuring that certain items are secured or protected from the elements.
• Your vehicle insurance policy may stipulate (for example) that your vehicle must be in a roadworthy state in order for you to claim in the event of a collision. This is one of the reasons why most insurers will require a hands-on evaluation of a damaged vehicle by an appointed agent before approving a claim.
• There are also very often conditions that govern the extent of what can be claimed against. For example, if your geyser bursts unexpectedly and your house is flooded, this is usually viewed as a legitimate claim. But, if your geyser element ceases to function due to age, and needs to be replaced, it is an expense you would have to bear. This is an example of an issue which very frequently leads to misunderstanding on the part of consumers: the issue of predictable wear and tear versus unpredictable damage or loss due to unforeseen factors.

What is Specifically Covered by Insurance?

Insurance coverage is generally intended to compensate a policyholder for sudden or unforeseeable losses or damages. That’s why it is critically important to pay close attention to any exclusions and limitations outlined in your policy. These exclusions usually apply to anything that does not constitute an accidental or unforeseeable loss. So, they typically include causes like gradual wear and tear, aging, or deterioration of assets. Routine maintenance and repairs of assets or buildings are the responsibility of the policyholder. Generally, there are two stipulations governing the granting of insurance to a policyholder:

• The risks and extent of financial coverage outlined in an insurance policy must be quantified or known – and specifically outlined in the description of cover granted.
• The risks should also be agreed to – which means that there is a mutual acceptance of what constitutes a legitimate claim. When you take out insurance, you are not just being granted a certain level of cover but are also explicitly agreeing to the terms and conditions governing that cover.

The most common risks that are explicitly agreed to in an insurance contract are natural or unnatural events like fire, lightning, explosions, earthquakes, floods, and storms – in addition to theft, accident, and hijacking, to name but a few.

Why is Wear and Tear Typically Not Covered By Insurance?

Household insurance, asset insurance, and vehicle insurance do not provide cover in the event of normal wear and tear, gradual deterioration, or aging. These exclusions are in place because such factors are considered part of the expected maintenance and budgeting responsibilities of the policyholder. Remember, too, that these exclusions don’t only apply to normal wear and tear on assets over time – they also very specifically exclude claims in the event of abuse or lack of reasonable maintenance. For example, if the owner of a vehicle has modifications done that fall outside of the agreed-to scope of maintenance or mechanical operation, this could be viewed as a type of deliberate action that implicitly increases the wear and tear on the vehicle, and even though it may not be the direct cause of an accident or other damage, it may still lead to the rejection of a claim. In essence, many insurance policies implicitly state that the consumer has a duty of care toward the property or asset covered by insurance, and that failure to do so can be viewed as a breach of the contract between the insurer and the insured party. There are some insurers who offer additional and specific cover to cater precisely for predictable wear and tear on certain items – for example, the replacement of a geyser element, or cover against rust and inevitable deterioration. Be aware, though, that this comes at a cost.

Why Obtaining Professional Insurance Advice is So Important

Navigating the requirements and stipulations of an insurance policy on your own can be daunting. It makes far more sense to obtain advice and assistance from a professional who can guide you, provide reassurance, and facilitate a range of services:

• Assessing your coverage needs and providing personalized recommendations based on your specific circumstances and asset portfolio.
• Providing you with options best suited to your circumstances, requirements, and budget, and explaining the benefits and limitations clearly and simply so you can make informed decisions.
• Assessing your current level of cover and providing expert recommendations to ensure there are no aspects that have been overlooked or that may result in a claim being rejected due to non-compliance or misunderstanding of the clauses contained in your insurance policies.

Experience and Expertise

An insurance professional will do more than just ensure your personal and business assets are afforded adequate insurance coverage. At The Pogir Group, we’re committed to developing a long-term relationship of mutual trust and understanding with our clients. And, as your circumstances change, so do your needs – whether you’re growing your business, upgrading your home, or downscaling your lifestyle. In addition to short-term insurance and life financial planning, The Pogir Group also offers personalised wealth management, bespoke personal and corporate healthcare solutions, and employee benefit programs. For more information, contact us today to arrange a no-obligation consultation. Pogir. Smart, with heart.