Definition of Damage
I received a question from a broker as follows:
Just a quickie – I have noticed that my existing cluster group policy for Unspecified Damage begins with the meaning as “…Damage caused by any Peril…”.
I think by adding the word Loss as well as Damage the client would receive an advantage? Eg Loss and or Damage caused by any Peril.
Can you confirm your thoughts please? Kind Regards Jason” [Surname and email provided]
My reply to Jason:
Unspecified Damage is the modern and in my opinion, correct term for this sub-limit. It was previously known as accidental damage and in some cases specified damage. The use of these words contravenes the then Trade Practices Act.
Regarding the policy it is important to read it as a whole and not just in isolation. If we go back to the base wording, the heading of the Section 1 in the Mark IV is ‘Material Loss or Damage’ as is the case in the Mark V as well.
The Definition of Damage in ‘the indemnity’ section reads ‘In the event of any physical loss, destruction or damage (hereinafter Section 1 referred to as ‘damage’ with ‘damaged’ having a corresponding meaning) not otherwise excluded’.
This being the case I do not believe that adding the word ‘Loss’, a further time would add anything to the policy as the ‘indemnity provided is from loss arising from Damage with the cover provided by the Insurer then set out under the Basis of Settlement’.
What I would add is that it has never been an issue in any of the claims that I have been involved in, or any of the team at LMI for that matter.
I hope this explains it.