Expand the range of your insurance

An enhanced policy covers a wider range of losses but also calls for a higher premium. FILE 

By  CATHY MPUTHI

In Summary

• Analyse the risk your business is exposed to and take cover as widely as possible

Most insurance companies do not cover losses that arise from terrorism, riots, sabotage or strikes, floods and other acts of nature. Yet when these incidents occur they cause major losses.

In most instances, insurers do not cover these losses as when they do occur, the losses are catastrophic. Lately, however, some insurance companies have started offering the covers, sometimes as a standalones or as part of an enhanced cover.

An enhanced policy covers a wider range of losses but also calls for a higher premium. Since most basic covers exempt the losses mentioned above, there is need for businesses that are likely to suffer such losses to take out an additional cover.

Also, most businesses that serve the public — like malls, institutions of learning, churches and mosques — should consider taking this enhanced cover.

Not only does acts of terrorism cause massive loss of property, but often, the buildings that house businesses are affected forcing both the owner of the building and of the business to shoulder the risk personally.

Acts of sabotage, not covered by insurance, occur when a person willingly causes malicious damage to property, usually so as to recover the sum insured.

There have been many cases of people insured setting fire or destroying by other means their premises to recover the sum insured. This is why insurance companies assign investigators to ascertain the cause of the loss.

Insurance contracts and policies are subject to interpretation laws and principles. The courts in assessing the cause of the loss, gives effect to these rules.

Direct cause

In other cases, the court assesses the cause of the loss to ascertain if it is attributable to an insured event. For example if you take out a fire insurance and terrorists enter the premises and set it on fire, chances are you will not be compensated as the direct cause of the loss was terrorism.

If you have insured your vehicle for only third party losses, then you will not be compensated in the event your car is broken into. Therefore, businesses should now appreciate the risk they are exposed to and ensure their policies are wide enough to cover all those losses.

It is good to talk to your broker or agent to take you through the various options covered under the policy you intend to take.

Make a proper and prudent analysis of the risk your business is exposed to and ensure you cover as widely as possible.

In as much as policies are fairly standard documents, it is good to understand your policy document and your cover before signing the dotted line.