My car was badly damaged by a Natural Disaster. Can I claim from the insurance company?
You can recover the loss from the insurance company provided that you possess a policy that covers the loss from a natural disaster.
The Insurance Company deducted from the repair bill of my car on the ground that I had undervalued car.
Under-insurance is used as a practice to obtain a reduced sum insured where the policyholders could pay a lower premium. Underinsurance happens when the insured, at his/her own risk, insures the property for an amount less than the value at risk. As we discussed in our second article, premiums are based upon certain factors such as the sum insured, benefits payable, expenses etc. The premium has to be adequate and equitable. It is the responsibility of the insured to decide adequacy of the sum insured, where he contributes to the common pool in an adequate and equitable manner. The insurance company receives only a proportion of the correct premium for the total value at risk, when there is under-insurance. A mechanism called ‘Average’ is used to penalise under-insurance where the claim will not be paid in full.
A lorry driven on the highway crashed into my shop and damaged it. It was found that the lorry has only a Third Party Insurance. Am I able to claim damage from the insurance company, which insured the lorry under Third party insurance?
For a claim to be payable under a third party section of the policy, the owner/driver of the vehicle must be proved in courts that the driver was negligent for the accident. The insurance company would look into the fact that there has to be prosecution/conviction of the negligent lorry driver who has third party insurance. Unless there is prosecution/conviction, the insurance company is not liable to pay.
What does it mean by Excess?
It is a ‘condition’ in an insurance policy. Excess is that portion of the claim amount, which is borne by the insured in the event of a claim. The claim is payable only if the loss exceeds the excess and no claim is paid up to the amount indicated as excess. This condition is applied on the policies to make the insured responsible for part of the loss, avoid minor claims and avoid high frequency claims.
What is meant by ‘10% with a minimum of Rs 10,000/- from the claim amount’, under excesses.
In the event of a claim the insurance company will deduct from the claim payment, 10% or Rs 10,000/-, whichever is higher. This amount is borne by the policyholder.
What is a deductible?
The term ‘deductible’ usually refers to very large excess. This is found in insurance policies relating to commercial purposes.
What is meant by ‘Exclusion’ under a policy?
It is a risk that is not covered under a basic policy or a particular extension/endorsement or clause. These exclusions may be included in the basic policy at an additional premium.
Will I get the full sum insured at the time of a claim?
It depends; if there is under insurance the insurance company will apply the concept of ‘average’ to penalise the under insurance. The Excess or deductible, if any, a percentage for depreciation and up-gradation will also be deducted from the claim amount.
How to differentiate between malicious damage and damage from Riot & Strike.
Malicious Damage - Damages done to your property by not more than 5 persons.
Damage from Riot & Strike - Damages done to your Property by more than 5 persons. There are other criteria to form riot damage apart from the number of persons, such as unauthorised assembly of people to execute an event, execution of that damage by the group of people, putting at least one person in public at fear etc.
What are the risks covered under the basic Fire Policy?
- Fire by any cause unless otherwise excluded, and Lightning
- Policy further covers explosion of boilers used for domestic purposes & gas used for domestic purposes and Electrical fires by ‘short-circuiting’ (excluding the origin of Fire).
What are the risks, which are not covered under the basic Fire Policy?
- Loss by theft during or after a fire
- Loss by its own fermentation, natural heating, spontaneous combustion or undergoing heating or drying process
- Burning of property by public authority
- Subterranean Fire
- War and allied perils including riot, civil commotion and terrorism
- Ionising radiation or contamination and nuclear risks
- Earthquake, volcanic eruption and other convulsions of nature
- Cyclone, Storm, Tempest, Typhoon, Hurricane, Tornado and other atmospheric disturbances
- Explosions other than explosion of boilers/gas used for domestic purposes
- Damage caused by burning of forests, forests & bush fires and clearing of lands etc.
- Damage to electrical machines and apparatus by over heating, short-circuiting, arcing etc. including lightning
What are the other perils and extensions under a Fire Policy?
- Riot and Strike (Max. Rs. 1 billion through the Government Fund set up for same)
- Malicious Damage
- Terrorism (Max. Rs. 250 million through the Government Fund set up for same)
- Electrical Extra (To cover the origin of Fire)
- Impact Damage
- Aircraft Damage
- Cyclone/Storm/Tempest Damage
- Flood Damage
- Burst Pipes/Tanks etc.
- Spontaneous Combustion
- Earthquake Fire and Shock Damage
- Natural Perils
- Sprinkler Leakage
What are the Time limits in a Fire policy?
- Any loss/damage should be informed immediately to the insurance company.
- The details should be submitted within 15 days of the occurrence of loss/Damage.
If my electrical items get damaged from lightning, can I claim from the insurance company?
Yes, you can if you have extended your electrical items to cover Electrical Extra Clause and if those damaged items show visible fire marks. The basic Fire policy covers spreading fire through electrical short-circuiting, lighting etc but the Electrical Extra clause covers the origin of fire.
What are the types of policies available for various categories of vehicles?
- Private Car Policy
- Commercial Vehicle Policy
- Motor Cycle Policy
- Special Types Vehicles
- Motor Trade Plate
What are the types of Motor Insurance Covers available in Sri Lanka?
- Act Only Policy
- 3rd Party Only Policy
- 3rd Party Fire and Theft Policy
- Comprehensive Policy
What is Act Only Cover?
This policy covers death and bodily injuries of third parties (the people on the road). This cover is the minimum requirement in Law (Motor Traffic Act No.14 of 1951) and is seldom issued by insurers unless the driver/owner has a very poor track record of claims.
What is the difference between a comprehensive motor insurance policy and a third party cover?
The comprehensive insurance policy covers the damages to your vehicle, liability towards third parties (death or bodily injury to the people on the road and damages to or loss of third party property) and medical expenses incurred due to bodily injury of the insured, authorised driver or passengers, whilst the third party insurance policy covers only death or bodily injury to the people on the road and damages to or loss of third party property.
What exactly does a Comprehensive Motor Insurance policy cover?
The comprehensive cover does not cover your vehicle from all perils. The perils covered under a basic comprehensive policy are
- Own Damage
- Damage to vehicle by collision, overturning
- Damage to vehicle by fire, external explosion, self-ignition, lightning, burglary, housebreaking, theft and other accidental cause
- Malicious acts
- In transit by road, rail or inland waterway, lift or elevator
- Reasonable cost of protection
- Liability to third parties
All sums including claimant’s costs and expenses, which the insured or authorised driver is legally liable to pay in the event of:
- Death or bodily injury to third parties
- Loss of or damage to third parties’ property
- Medical Expenses
Medical expenses incurred due to any bodily injury sustained by the insured or driver or any passenger of the motor vehicle as a direct result of an accident to the motor vehicle.
What are the other additional covers that I can take with a Comprehensive Motor insurance cover?
You can take any of the following additional covers by paying an additional premium, to ensure that your vehicle is further covered.
- Personal Accident Benefits
- Workmen's Compensation cover
- Strikes, riots and civil commotion cover
- Terrorism cover
- Duty Free Cover (when you insure your vehicle for duty free value)
- Specified natural Perils
- Learner driver cover
- Airbag cover
- Glass Breakage Cover
- Legal Liability to Passengers (Commercial Vehicles)
- Goods in Transit (Commercial Vehicles)
- Increased 3rd party property damage cover (Commercial Vehicles)
- Inclusion of specified items (Commercial Vehicles)
Who has an insurable interest in relation to motor insurance?
- Owner of the vehicle
- Anyone who is driving or using a vehicle (for the use of the vehicle)
- Anyone who borrows a vehicle
- A person renting a vehicle may be liable for loss or damage, by the terms and conditions of the rental agreement
- A hire purchase or lease company (to the extent of their continued ownership)
How to determine the sum insured for my car?
The market value of your car should be the basis for determining the sum insured. Market Value represents the cost of purchasing ‘a replacement car’ of the same model, make and usage at the time of a loss.
What should I do in the event of an accident involving my vehicle?
Report the accident immediately to the nearest police station since the Law requires making of a statement to the Police by the parties involved in the accident (Section 161 of Motor Traffic Act No.14 of 1951). At the same time, inform the insurance company upon occurrence of an incident, giving rise to a claim under the policy.
What are the main categories of Marine Insurance?
- Cargo and
- Hull Insurance.
Cargo insurance is more common in Sri Lanka
Marine Cargo Insurance encompasses insurance of cargo, where it is moved from one place to another, be it by sea, air, land transit, parcel post or courier sending, which can be insured against loss or damage during transit.
On the other hand, Marine Hull Insurance covers the ship owner against the physical loss or damage to the ship itself. The actual hull or the steel plates, the engines and auxiliary machinery that one would find on board a vessel are covered under Marine Hull Insurance.
What covers are available for Marine Cargo Insurance?
There are three main types of covers, which are internationally recognized, known as the Institute Cargo Clauses.
- Total Loss Only – Minimum cover available
- Institute Cargo Clause 'C' – Eight perils are covered. This provides a restricted cover
- Institute cargo Clause 'B' - Wider than the restricted cover in ICC ‘C’. Additional four perils are covered together with the perils mentioned under ICC ‘C’
- Institute Cargo Clause 'A' - All risk cover subject to general exclusions
What is covered under Marine Cargo Insurance?
- Inland Transit
- Goods in Transit
- Produce in Transit
- Stock Through-put : This cover is provided for manufacturers, where the raw materials could be covered from the time the cargo receives at the port and until the final product is placed on board the vessel, e.g. Garment Manufacturing. Similarly, a Tea Factory owner could insure from the time the tea is plucked, transported, processed and sent to auctions. The premiums are based on annual turnover and other sub-limits
What is Personal Accident Cover?
It covers death due to or permanent or partial disablement due to accidental visible and external means, as it can cause deterioration in health and may impact on the earning capacity or the quality of life of an individual.
What is the scope of Personal Accident Cover?
- Accidental Death – 100% benefits payable
- Permanent Disablement - Loss of one or more limbs/eyes. Percentage of benefits payable as specified in the policy.
- Permanent Total Disablement – 100% benefits payable after 52 weeks, for disability from continuing his/her occupation or profession
- Temporary Total Disablement - Weekly Benefits payable up to max. 52 weeks, not exceeding 1% of the sum insured or actual weekly income whichever is lower.
- Temporary Partial Disablement – Weekly benefits payable (not exceeding 40% of the TTD weekly benefits)
What does Permanent Total Disablement (PTD) mean?
Permanent Total Disablement entirely prevents a person (an insured person) from attending to their business or occupation, of any and every kind, or if they have no business or occupation from attending to their usual duties.
What does Temporary Partial Disablement (TPD) mean?
A person (an insured) is incapable of attending to a definite part of their normal duties due to an accident. A lower level of benefit is provided than temporary total disablement; however it is not sufficient merely to be feeling the effects of the accident.
Why should I need Fidelity Guarantee insurance cover as an Employer?
It provides protection to employers (effectively the insured) against the fraud and dishonesty of misappropriation of property belonging to their employees. The policy will cover losses, which can continue over a long period of time. The policy is one of indemnity and provides cover against loss of your property, which can include money, stock, work in progress, equipment and machinery following theft or fraud by the employee/s.
I am a professional person. Is there any insurance policy that I can cover my liabilities towards my clients?
Yes. Professional Indemnity Insurance protects the professional person against legal liability to pay damages to persons who have sustained financial loss arising from professional negligence or that of their employees in the conduct of the business. The policy offers indemnity strictly on a legal liability basis and moral liability is not covered. Additionally, the policy covers legal expenses in defending you.
Is there any cover that employers can purchase for the liabilities towards their employees in the event an employee suffers bodily injury or disease, which arises out of and in the course of their employment?
Yes. Workmen’s Compensation/Employer’s Liability Insurance covers the legal liability of an employer that relates to bodily injury or disease sustained by an employee, which arises out of and in the course of their employment. The policy covers common law liability which is unlimited if negligence of the employer could be proved and according to the law, Workmen’s Compensation Act, it provides various compensations based on the wages the worker is paid for death, injury or disablement.
What is Public Liability Insurance?
Public Liability Insurance protects the insured in respect of legal liability for bodily injury to third parties and any loss of or damage to third party property, in connection with the Insured’s business activities. Additionally, the policy covers legal expenses in defending you.
What is the scope of the Product Liability cover?
The scope of the Product Liability Insurance is to indemnify the insured in respect of legal liabilities arising out of bodily injury, illness or disease to any person or loss/damage caused by goods/products (or the containers thereof) supplied by the insured in connection with the business that he/she carries out.