Can you trust your insurer?

Can You Trust Your Insurer?

Yes, that is what insurance is all about. However, you need to know, as far as possible, what is covered, otherwise it may appear that you cannot trust your insurer. Unfortunately, very few people ever read through their insurance policies, except when there is a potential for claim. Therefore, few fully understand what may not be covered in the event of a problem. This is a major part of the reason to make use of the services of an insurance broker, someone who should be able to read a policy wording and translate it into English so that you have a chance to understand all the cover that you do have and sometimes more importantly what you do not have covered.

Another reason to talk to an insurance broker is to make sure that the cover that you have is the cover that you need. A broker is there to fit the policy to you and not fit you to the policy. Insurers, today, provide wider and clearer policy wordings, particularly Direct Writers who will happily provide cover in response to asking a few questions. However, the selection of questions is not always going to elicit all the information that is required to underwrite the risk properly. You answer the questions asked and assume that the cover is what you want. The danger is that you only find out if there is cover in the event of a claim.

Going on-line is easy you answer a few questions and receive a policy document. If you consult an insurance broker you can talk to someone face to face. It will take longer but it is the broker’s job to identify the covers that you need and match the best insurer and policy to that need.

I do not believe that any insurer or insurance broker will intentionally encourage spending money on cover that does not match your requirements. But if you have only answered a dozen questions it is possible that something has been missed that is very relevant to the risk.

In this connection, I would refer to the Corona Covid 19 pandemic. There is some difficulty in customers claiming for Business Interruption when the majority of policy wordings do not allow for such a claim. Insurers, quite correctly, explain that their policy wording is aimed at accepting a claim after physical damage to the premises and although many will also include a reference to ‘notifiable diseases’ they usually give an indication of what these diseases might be and do not include pandemics.

Once again an insurance broker should be able to clarify what, why and how the insurer will avoid a claim under the Business Interruption section of a policy. In the case of Covid 19 it is a new virus, never met before and it caught the whole world ‘on the hop’. Now although the correct solution has not, yet, been found there is enough information available to consider underwriting this as an insurable risk, at a cost. Do not expect insurers to be rushing to add Covid Cover at no additional cost. It does not discriminate who or where to attack and we must expect it to take many years, if ever, to eradicate the disease.

At the time of writing the Regulator (Financial Conduct Authority) is taking the question of pandemic cover to the High Court for clarification of what the insurer’s wordings should accept as a claim under Business Interruption. A number of Insurers, Allianz, Hiscocks etc. are also facing legal actions from clients but these are in abeyance until the FCA case has been resolved.

In summary, while you can trust your insurer, it will help if you can understand the covers that you require and the covers that you have under your policy. An Insurance Broker will be able to explain the policy wording to you and make sure that it is what you actually require. In the event of a claim and an insurance broker will be able to explain what a Loss Adjuster does, if one is appointed, and clarify the result of your claim from the insurers response.

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