I cannot understanding headlines like this..

For the past month I have been working over in the United States as LMI launches products such as our Business Income (BI) calculator into this market.

While there, hurricanes hit in Texas and Florida and it was heartbreaking to me to read that people were not fully insured for such events which are not a case of: ‘if it happens’, but rather: ‘when it happens’.

While an enormous amount of money has been collected for Texas it will come no where near the total cost of the damage.

Flood is a major problem following any major storm, let alone hurricanes, typhoons or cyclones.

With the number of major storm events that the US has suffered over the years, and the soft insurance market, I simply cannot understand why people thought they could take the risk.

I did hear some say they could not afford insurance, but the obvious question is now your home or business is destroyed, how can you afford not to have it!

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NSW Government continue to bend the facts to hide their ineptitude.

Like all rate payers in New South Wales, I received this (image) flyer from the New South Wales Government on the emergency services levy.

I cannot accept that deferring the levy is going to help those that are currently bearing the cost of funding the fire and emergency services.

Fact 1: everyone in New South Wales benefits from having an efficient, well funded, well trained and equipped fire and emergency services.

Fact 2: the men and women that do this work deserve our full support for doing some of the most dangerous and stressful work in our society to protect all of us and our property.

Fact 3: it is completely unfair that only a percentage of the community bear the bulk of the cost and not everyone.

Fact 4: by deferring the changes, it means that those that insure go back to bearing the brunt of funding the fire and emergency services.

Fact 5: this, in turn, means that to avoid paying the levy people do not insure or do not insure fully. Putting an even greater burden on the prudent and risk averse who insure fully.

Fact 6: Currently, the Fire and Emergency Services means that many insurance policies are 40% higher in New South Wales than say Victoria. If you add the triple taxation of Goods and Services Tax being imposed on the Fire and Emergency Services and then the State Government Stamp Duty on insurance premiums, Fire and Emergency Services Fees, and the GST component any fool can see the inequity of having the levy on any product or service.

Fact 7: Every single study on Fire and Emergency Services shows that the fairest way for the community to fund the service is to have as broad a tax base as possible. This is property rates where everyone pays, whether you are a tenant or an owner occupier.

Fact 8: In 2012, the New South Wales Government issued a White Paper and called for input from the community on moving the levy away from insurance, rightly pointing out that it was inequitable in the current form. This means the NSW government have had 5 years to get this right as well as the benefit of consulting with all the other mainland states who successfully made the transition from insurance to property rates.

Armed with these facts, I am sure that you will agree with me that this is a monumental and inexcusable balls up by the New South Wales government.

I am pleased to see the issue is getting some time in the Sydney Morning Herald  which sheds more facts on the waste involved here and how the new levy was so wrongly calculated. For a home owner who fully insures it should logically have gone down with the broader tax base.

We cannot put the toothpaste back in the tube but what we need is some honesty on the part of the Government that they and only they got it wrong and secondly an honest time line as to when the reforms will be implemented.

My guess is that it is in the too hard basket for this government, that is, it is beyond their ability and that we may be stuck with it for another generation.

Of course, this is not the only issue this government has failed us on. The water issue from the Murray Darling is a complete story of failure in itself.

We all deserve better!

 

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Blocked sewage pipes – the curse of the baby wipes

Here as some wipes that clogged pipework and caused an overflow situation. You can see there is no sign of them breaking down.

Just one of the many brands of baby wipes on the market that may cause a problem if not disposed of correctly.

LMI Claims have seen a number of water damage claims arise due to blocked pipes. While tree roots used to be the most common cause, the cause now is often baby wipes.

Most are not biodegradable and therefore not suitable for flushing down the toilet.

We have even seen the ones that claim to be flush-able causing problems.

With an overflow from sewage it is not a simple mop up and move on, especially if carpets or other soft furnishings are involved.

Following the old adage that prevention is better than cure, I hope this short post stops this from occurring at your home or place of work.

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Interesting Blog Question on relying on a home policy for liability borne out of a contract.

I received the following question from one of the brokers I admire most when it comes to technical knowledge and commitment to the insurance industry and his clients. It is one of the few occasions I can recall taking a different view. Here is the issue:

There is a clause that is an exclusion in a Householder’s policy Liability section, which I think is being misinterpreted. It is “Any agreement or contract you enter into”, however we will cover your liability if you would have been liable without the agreement or contract.

As a result, I am getting lots of requests to quote Event Liability Insurance for things like birthday parties in a local hall or park. The Council or Hall Hirer demands they have at least $10,000,000 cover. Insurer sees that as an agreement. I point to the second part and say they would still have a common law duty of care anyway so that part should be covered, not if there was a hold harmless requirement though.

As a consequence, they cannot get certificates of currency off the insurer to provide as evidence to the property owner.

The weird thing is some policies exclude leases being part of this exclusion, others make no mention of this.

To me the intent is not to place more of the normal PL [public liability] risk on the insurers than otherwise would be, in any contract that is signed.

Of course none of these issues are picked up or interpreted in your policy comparison.  So how do you think this clause should be interpreted?

Regards

Robert [surname and email attached]

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I replied as follows:

Hi Robert,

A lot of the council and community halls require very broad protection against them, through the terms of the hire agreement/contract to the detriment of the party holder.

Let us say someone gets electrocuted or a wall collapses, someone trips over a rough edge on a step or pathway. The holder of the party would not normally be held responsible, but the contract may put the onus back on them for the duration they are there. If the contract has an indemnity clause or requires the owner of the property to be named as an insured then there can be a very real problem.

Their home owner or home contents policy would not indemnify them, or in most cases provide legal expense cover, as this liability arises solely out of the contract.

It is unreasonable in my mind that the contracts have such clauses but it is a simple case of the landlord or operator of the venue wishing to transfer the risk away from themselves to the, often unsuspecting, party holder.

There have been a couple of really big cases along this line and the party holder did not have insurance and in one major case I am aware of they sued the broker.

With some home owner and home contents policies there are blanket exclusions on any loss arising out of the consumption of alcohol and drugs. This is not illegal drugs but any drug. Either exclusion may well make the policy of no value to the Insured when hosting a party at their home or at another venue.

Another issue is that we have had a lot of problems with gate crashes who hear about the event on social media and this creates another whole problem in itself, although this seems not to have been in the news here as much as in the past or perhaps my children are now out of that teenage period (Thank goodness).

I think events liability insurance is the way to go and keep the householders policy completely out of it, the householders policy has not been designed as I see it for this type of one off risk.

Regards

Allan

PS: the whole issue of contract risk is so serious it prompted me to write my first eBook on the subject. This can be downloaded free here or you can purchase a hard copy from the publications area of the LMI Group website.

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Actions of the sea – Cyclone Debbie continues her path of destruction

Photo/Martin Sykes found on: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11832871

I have posted recently about the issue of actions of the sea, high water, flood and erosions, and with Ex-cyclone Debbie now finishing her path, leaving a trail of destruction in her wake we readdress this issue.

We look at the damage that has occurred and again we face a similar issue to that in Australia, in New Zealand now, where a home has their pool hanging OVER the cliff’s edge due to the land falling away.

See: https://www.tvnz.co.nz/one-news/new-zealand/raw-drone-footage-shows-auckland-homes-infinity-pool-hanging-off-cliff-after-backyards-massive-slip

When any of us purchase, or rent for that matter, a property, we have to make sure that the asset does not suddenly turn into a massive liability. Some risks are insurable, others, if they occur to frequently such as flood in some places or if they are deemed inevitable such as erosion, they may well not be.

 

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Cleaning effervescent

Today’s post is a follow up on a post two days back which centred around a potential product liability claim involving pavers which had been effected by unsightly effervescent powder.

What is effervescence?

Efflorescence is the chalky white look that develops on many bricks and pavers from naturally occurring salts in the raw materials bricks and pavers are made from whether this be clay or concrete.

Typically it is not harmful to the pavers in the short term, however if untreated, overtime it could start to wear away the surface. As long as it is kept under control, the effect of efflorescence should not cause any major problems.

Efflorescence is easily removed with a cleaner specially used for concrete surfaces. My research and experience suggests it is best to monitor the condition of the bricks or pavers and act promptly if there is a noticeable build up of white residue.

The problem may well reappear particularly after rain or the pavers or bricks getting wet but here is a suggested plan of attack to clean Brick and Concrete pavers:

  1. The first step is to ensure that there are no damaged, lose or shifting of the pavers. Then you can start to remove any excess dirt and debris from the surface. You can do this with a broom by sweeping the excess waste into one spot and then you can dispose of it.
  2. If you notice any harsh stains like petrol, oil, grease or tire marks, then you can purchase a water based cleaning solution specially formulated for such stains. Apply this solution to the affected area and leave it for approximately 15-20 minutes.
  3. Then use a high pressured hose to rinse off the solution.
  4. Mix a small amount of a household detergent with warm water and apply it to the pavement with the use of a broom.
  5. Once the area has been covered evenly you can then rinse thoroughly with a hose and leave it to dry.

You may need to do this at least once a month to ensure your prone bricks and pavers are kept healthy, as well as nice and clean.

 

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Section 54 of the Insurance Contracts Act and its relevance to new US and UK ban

“New provisions from the UK government means that those travelling to the UK on a flight originating from any country on the banned list will not be permitted to bring personal electronic devices (PEDs) larger than 16cm in length, 9.3cm in width and 1.5cm in depth (or thickness) into the cabin, needing to place these items in their checked luggage instead. The US does not give specifications for the PEDs banned from flights but requires any device larger than a cell phone or smartphone to be placed in checked baggage.”

It is not uncommon for a Travel Insurance Policy to exclude damage to “Luggage and Personal Effects” that are checked into cargo hold. However, with recent bans being put in place by the US and UK whereby flights to certain Middle Eastern countries have banned any PED’s in any carry on luggage, forcing travelers to check in these devices to the cargo hold.

One such exclusion is worded as follows:

your valuables or their accessories are checked in to be transported in the cargo hold of any aircraft, ship, train, tram or bus (including any loss from the point of check in until collection by you from the baggage carousel or collection area at the end of your flight, voyage or trip);

What does this mean for the Policy holder, forced to check in their items?

Section 54 of the Insurance Contracts Act states that the insurer may not refuse to pay claims in certain circumstances, including where:

  • The act was necessary to protect the safety of a person or to preserve property.
  • It was not reasonably possible for the insured or other person not to do the act.

If the airline gives you no alternative other than placing the device in checked luggage, then Section 54 of the Insurance Contracts Act should prevent the travel insurer from rejecting your claim on those grounds.

A list of countries affected by the ban for both the US and UK can be found here: https://www.finder.com.au/us-and-uk-in-cabin-laptop-ban

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Acts of God in Insurance

It amazes me how many times people have spoken of Act of God being both an insured or excluded peril under an insurance policy.

There was even a famous Billy Connolly with this as its theme. My nephew, Jeffery, one of the guys sending me a joke questioned me on it and I thought it was worth setting the record straight.

Despite having read thousands of policies of insurance and being involved in the drafting of 100’s more, I have never seen the words ‘Act of God’ appear in a policy as an insured, or excluded peril.

What it means in layman’s term is:

a completely unforeseeable event where there has been no human intervention

Things such as fire, lightening, earthquake, tornado, hurricane, cyclone, flood, landslip, and the like.

Under policies such as a comprehensive motor vehicle policy, all these perils are in fact, insured. Most property policies, such as your home and contents, business pack or ISR, the vast majority would be insured, although landslip, action by the sea, storm surge and flood may be excluded.

If you are in any doubt as to the cover afforded by the policy which you have in place, I recommend that you speak to your insurance broker.

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Insurance – Unfairly vilified

The media, instilling the incorrect message into the heads of the public.

This week on FM Radio, Triple M, the insurance industry was once again vilified, this time by the hosts of breakfast radio.

The background of the matter was that one of the journalists was hit in the rear while driving across the Bolte bridge, and as a result of the hit, was pushed into the vehicle in front of him. The vehicle that caused the accident, failed to stop and the police nor City-link would assist with providing the registration number of the vehicle that caused the accident.

The insurer, in this case GIO, were criticised because they required the insured to pay the policy excess.

The reality is, a policy excess means that the insured is responsible to pay the first amount as shown on the schedule for any claim under the policy. The size of the excess is reflected in the premium charged on the policy. To make it easier for clients and as a value add, many insurers including GIO, have been waiving the Insured’s need to pay the excess where a third party who was 100% responsible is identified. This probably saves them the hassle of collecting the excess and then refunding it. But for whatever reason, it is to the Insured’s benefit that this process takes place.

Where this is not possible, then in the first instance the Insured is required and should, based on the price paid for the product, pay the excess. If during the recovery process the insurer is able to identify the vehicle and a successfully recovery is able to be retained from the third party, then the excess will be refunded.

As the excess is by definition the first part of any claim, it is only reimbursed when the balance of the claim has been paid to the insurer.

Rather than demonising the insurance industry for the approach taken in this case, all the people who are not required to pay the excess when they can provide the registration number and details of the responsible party, should be appreciative of the no-fault excess process.

With more and more people thinking it is acceptable to hit and run and an increase in road rage, coupled with a continued drop in price, my recommendation is to get a front and rear dash cam fitted to your vehicle and then this whole matter would be avoided.

The last point I would make is that whilst I was not present, I cannot understand with modern seat belts how the journalists chin hit the steering wheel if driving the vehicle correctly.

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Theft from motor vehicles

There has been another spate of theft from motor vehicles in my street and I thought I would share with you the advice that the police have issued to all the residents.

  • Do not leave spare keys or keys of other vehicles or house keys in your car

You will recall in an earlier post that I did warn thieves are seeking the service key that is left in some high end motor vehicles.

  • Consider where you keep your garage remote control.

If you leave this in your car and your garage has access to your house, the thieves suddenly have access to your entire home through the garage door. View full post…

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