INSURANCE PLATFORM with WEBSTER TWAAMBO Jr
IN the recent past, the Pensions and Insurance Authority (PIA) introduced key facts statements (KFS) on some insurance products in the market, which will become effective soon.
The KFSs are meant to highlight salient features and benefits to allow customers appreciate such products in a standardised format.
The selected general insurance products include house-owners, householders, motor third party and motor comprehensive.
A standard fire insurance policy covers three basic perils namely fire, lighting and explosion.
A wide range of other perils may be included on a standard policy vis-à-vis storm and flood damage, earthquake, subsidence etc.
Besides this main cover, house-owners insurance may provide various benefits as highlighted below.
Loss of income is one of the benefits under the policy. The intention of this provision is to allow the owner of the house continue to receive their rental income.
This is an important factor in financial planning to guarantee revenue subject to policy limits. Being a benefit, it is important for the insured to analyse the policy limits to ensure that they are adequate and insurers may charge extra premium for increased limits.
Similar to loss of income, a house-owners policy may provide for alternative accommodation to the owner.
Whereas the intention of loss of income provision is to compensate the insured for loss of income, alternative accommodation allows the insured to find optional accommodation subject to policy limits.
If house is gutted by fire, it may become inhabitable and this may force the insured to move out and give way for reconstruction.
During this period, the policy will pay for optional arrangements for a similar house. Again the insured needs to cross check the limits provided to ensure adequacy.
Impact damage is another provision under a house-owners policy.
A few years ago, there was a blind spot in Ndola at the junction of Chifubu and Kaleya road where a house located at this spot was susceptible to cars ramming into it.
When a vehicle rams into a house, there are two insurance options to respond to the loss i.e. either a motor policy, under third party property damage or a house-owners policy.
Going by the former, a standard third party property damage limit of K30, 000 may not be sufficient to meet the repair costs to the house and the vehicle owner may not be in a financial position to pay the difference. In such cases, claiming under a house-owners policy becomes the best option by the owner of the house.
Further, impact damage may also be by way of falling trees, or aerial device or flying objects damage.
The house-owners policy also covers accidental breakage of glass including accidental damage to underground pipes, drains, sewer pipes and cables or pipes for water electricity and telephone etc.
Another benefit under a house-owners policy is damage following theft or attempted theft at the insured house.
The policy will pay for the cost of repairing associated with any physical damage to structure upon entry or exit to the premises following a theft or attempted theft.
A house-owners policy may also have a public liability benefit.
This section covers legal liability to third parties for loss or damage to their properties including injuries or death according to policy limits.
House-owners have a duty of care to visitors on their premises and if they fail to exercise due caution to their visitors they may be liable for loss or damage to their property or injuries at law.
If a house is gutted by fire, it follows that there certain activities that should be done before actual reconstruction could commence.
Some of these include cost of demolishing and professional fees. Demolishing costs might include demolishing the building, which becomes weakened by the fire, removing the debris from the site so that a new structure can be built.
Further, erection of hoardings may be required for building operations. Other costs may include employment of security guards that may be needed to protect the premises following an insured event.
Additionally, there may be need for architect’s fees, quantity surveyors fees, consulting engineer’s fees and other regulatory fees associated with the construction process.
Another benefit on a house-owners policy relates to loss or damage of water pumps used for domestic purposes. This section covers the cost of repairing or replacing water pumping machinery against accidental loss or damage.
It is evident that a house-owners policy has several other benefits besides the main cover under the policy.
It is important for customers to be aware of benefits so that they enjoy the full benefits of an insurance policy should they suffer loss.
Some of these benefits are standard while others are extras, therefore customers need to be aware as they buy house-owners insurance.
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