FAQ 
- What is Betterment?
- Where the results of repairs or replacement as a result of a loss results in the insured receiving something better than he had before the loss, the difference is known as "betterment". In most instances, this difference is discussed before the repairs or replacement has been made and the insured has agreed to an appropriate figure as his contribution for this "betterment". This is also referred to from time to time as "new for old".
- What is an Ex-Gratia Payment?
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This is a payment out of grace or kindness, and not a legal obligation under the contract. Sometimes policyholders have no legal right to a claim payment because the event causing loss or damage is outside the scope of the policy. A payment or part payment will occasionally be made to ensure the good name of the company if:
- the decision on liability was a border-line one; or
- there was some genuine oversight; or
- hardship would be created; or
- the case involves a well valued client or intermediary.
- What is "Replacement Value"?
- This is the cash value that represents what it would cost to replace the particular article which is the subject of the insurance.
- What is a Loss Reserve?
- For every claim that is made against an insurance company, that company must estimate the probable ultimate cost of that claim and set the sum of money aside in a "Loss Reserve".
- What is an Underwriting Profit (or Loss)?
- The excess or earned premiums over incurred losses and expenses show the underwriting profit. The reverse shows an underwriting loss.
- What is Unearned Premium?
- This is the part of the premium which has not been used or earned and which must be returned to the insured in the event of cancellation of the policy by the company before its full term.
- What is meant by Pre-accident Value?
- This refers to the value of a vehicle immediately before an accident. It is determined by reference to the dealer's price and by applying a rate of depreciation to that value. The depreciation rate takes account of the age of the vehicle and is usually an agreed market rate.
It is threfore important that special accessories or other features that increase the value of the vehicle be declared at the start of each period of insurance. This will ensure that they are included in the pre-accident value.
- What is an Average Clause and how does it work?
- Any property that is insured under a Home Advantage, Fire & Allied Perils or Commercial All Risks policy is subject to the Average or Under-insurance Clause. The Average Clause divides a loss between the policy holder and the insurance company. The division depends on the amount of insurance on the property (sum insured) and the value of the property when the loss occurs.
For example, if you insure the property for half of its value, you will only be paid half of the claim, as you would have been considered as carrying the risk for the other half.
This principle can be further explained by the following example:
- Sum Insured = $500,000
- Replacement cost of property = $1,000,000
- Loss = $100,000
- Calculation of amount payable by Insurance Company: $500,000 / $1,000,000 x $100,000
- Settlement = $50,000
- What is Excess?
- The excess (or deductible) is the amount deducted by the insurance company from each claim settlement after the application of all others terms of the policy. It is therefore your contribution to the loss settlement. Losses falling within the limit of the excess will be borne entirely by the Insured.
An excess clause is applicable under all Advantage General Commercial and Home & Contents policies.
- What does Sum Insured mean?
- The sum insured represents the maximum amount that is payable under the policy. It is also the sum to which a rate is applied in order to determine the premium.
- What is meant by "rate"?
- This is a percentage or per mille figure which is derived from the claims experience and other factors for a particular class of business and which indicates an insurer price for accepting insurance. It is applied to the sum insured in order to arrive at the premium.
- What is meant by Loss Limit?
- Loss Limit usually refers to the maximum compensation that is paid under the policy. It differs from the sum insured, as the amount paid may not relate to an indemnity payment. It is a sum that is fixed by the Insured to represent the maximum amount which, in a worst possible situation, he/she could sustain as damage or become liable to pay to a third party.
It is therefore the limit of compensation under third party policies e.g Public, Motor Vehicle Third Party and Employers liability policies.
- What is an indemnity?
- An Indemnity refers to a loss payment which is intended to return an Insured to the same financial position which was enjoyed prior to a loss. For example, if a house is damaged or destroyed, the payment is expected to permit repair or enable replacement of the house. This is only possible if the sum insured reflects current replacement costs.
All property policies such as Fire, Home Advantage and Motor are policies of Indemnity.
- What is a policy schedule?
- The policy schedule describes in detail the subject matter of insurance, sum insured and the Insured's name and address, and it provides the policy number and the renewal date.
- What does Insurable Interest mean?
- An Insurable Interest is a relationship that is recognized by law, wherein the insured stands to benefit by the existence of the subject matter of insurance or is prejudiced by its loss. This means that only persons or organizations with an insurable interest have the right to insure.
- What is a Total Loss?
- When property is destroyed or the cost of repairs is uneconomical, there is a total loss. In situations where the repair is uneconomical, the property is regarded as a constructive total loss.
- What policy is best suited to cover loss or damage to my house and/or contents?
- A specially designed House and Content policy known as Home Advantage covers loss or damage due to acts of God, fire & explosion, falling trees, structural damage due to tree roots, loss of damage due to burglary/theft, loss of money, loss of refrigerated goods.
It also covers liability that can arise out of domestic situations such as Employers Liability as well as Public Liability.
An owner of the house can insure the building or private dwelling, while an occupier or tenant can insure for contents. An owner or an occupier can insure both building and content.
- What is the purpose of having extensions or adding clauses to a policy?
- Extensions or Clauses are provided in order to widen or extend the scope of cover under the standard policy. For example, notification of a claim can be extended from seven (7) days to thirty (30) days, the usual cancellation period can be extended to thirty (30) days and reinstatement condition can be included.
- What is a Fire and Allied Perils Policy?
- A Fire Policy only covers fire, lightning and explosion. When other insured perils, such as earthquake, hurricane, storm, windstorm, cyclone, tornadoes, volcanic eruptions, flood, bursting & overflowing of water pipes, tanks and other apparatus, riot, strike & civil commotion, aircraft & other aerial devices, malicious damage, impact damage and bush fire are added, the policy is now known as an Extended Fire or a Fire an Allied Perils Policy.
- What is a Warranty?
- A Warranty is a policy condition that requires strict compliance, as a breach gives an insurer a right to repudiate a claim and, depending on the circumstances, to cancel the policy. Strict compliance means that there can be no excuse(s) regardless of the circumstance.
- What is a peril?
- A peril refers to an event that is insured, the occurrence of which results in loss or damage to the insured.
- Who is a permitted driver?
- A permitted driver is one who is authorized by the insured to drive the vehicle and who holds a valid licence to drive the particular vehicle. The words to "drive the particular vehicle" means that the driver must have CMC licence to drive a commercial vehicle and PPV to drive a taxi or bus.
- My vehicle is insured comprehensively but the insurance certificate reads, at the top, "The Motor Vehicle Insurance (Third Party Risks) Law Ca,257". Why is this?
- This is the Act that governs the insurance of all motor vehicles and every certificate that is issued must comply with certain provisions of the Act. When the Certificate is printed, irrespective of the type of policy, these words appear to indicate that issuance of the certificate is done in accordance with the provision of the Act.
Insurance jargons explained in customer-friendly language
