Traps with Some Home and Contents Policies – Trap #1: Faulty Workmanship
It is of great concern to me that Insureds believe that all general insurance policies are the same because, as a result of this belief, clients purchase insurance on price, which is the worst thing they can do when it comes to insurance.
My experience in handling claims has shown me time and time again that what matters is the coverage of the policy, the financial strength rating of the insurer and the claims service. Price, when a claim occurs, is irrelevant.
If you buy products based on price, the most you lose if it is a dud is the cost of the item. But with general insurance, which is intended top provide insurance protection for your home or business, you may lose not just your premium but your asset as well.
Over the next three posts I will explain three situations in which good people have been caught by policy exclusions which never appear in what I regard as good quality covers.
I am assisting our South Australian office that is presently involved in a case in which an Insurer contends that the fire at the home of the Insured which caused $1.5 million damage, was caused by the incorrect installation of a chimney flue. Under most policies in Australia and around the world, as long as the Insured was unaware of the fault or problem, the loss is covered by the policy. In this policy however, the following exclusion applies:
The opening words of the exclusion against which I have placed the number 1 reads: You are not covered under this policy for damage, loss or liability caused by, arising from or involving any of the following.” The use of such words creates a much wider exclusion than does the test for proximate cause. The words mean that, even if the excluded perils are the remote cause of the loss, there is no cover afforded by the Policy.
The second policy exclusion which is relevant is contained in the second box which I have marked with the number 2. It is a very harsh exclusion which excludes cover which has been provided under most policies for over 30 years. As such, I believe that more ought be done to bring such an exclusion to the attention of the Insured and not buried near the back of a huge booklet.
In this case, the Insured assures our South Australian manager, Mr Erik Kroon that it was not price that influenced them but the fact that the insurer advertised that they were there to assist seniors. No matter what the advertising says, it is still important to know the coverage actually afforded as well as the conditions and exclusions that apply. If you are in doubt an insurance broker is the answer.