Is My Paving and Perimeter Walls Covered?

Somebody asked me: “what is included under the building section of my Personal Lines Insurance Policy. Is my perimeter fence and paving covered?”

Please remember that this is a generic answer – it is important to study your own policy to be sure that you are covered for what you need. There is a reason why we have different insurance companies and different premiums. Ask your broker or contact your insurer.

The short answer is:

“Yes, it is covered, but only for the perils mentioned in your schedule and policy wording.”

I suggest you read the long answer (and your own policy).

The Long Answer

So this is what the wording I use as a basis says:

Property insured
white concrete buildingYour property insured is the private residential structures of your home. The Schedule gives its risk address and wall and roof construction. It includes all fixtures and fittings that belong to you as the owner or that you are responsible for as the owner. It does not include any fixtures and fittings that belong to a tenant or for which a tenant is responsible.

Then in the definitions, it says this:

fixtures and fittings belonging to the owner of the private residential structures while
in or on the structures;
fixed recreational and ornamental structures;
paved and surfaced areas (including driveways) of brick, concrete, asphalt or stone (not gravel);
boundary and other walls, gate posts, gates (including all the machinery related to the gates), fences (other than hedges);
tennis courts;
swimming pools, spa baths, saunas and associated machinery and equipment, but
not including movable swimming pools;
satellite dishes;
lightning conductors/masts;
fixed electric generators;
borehole machinery supplying water solely for domestic purposes;
septic tanks

From the above it is clear that paving and border fences and walls are included.

Two Things To Remember

There are two things to remember:

When you decide on the replacement value of your building, it is important to provide for paving and perimeter walls, or you could end up under insured.

The second thing that you need to make sure of in YOUR policy, is what you are insured for. Generally your insurance will cover you against about 11 perils. The question is: did one of the defined perils cause the damage? If the answer is “no,” there will be no cover. That is why you must make sure of what you have.

Retaining walls are bad news, from an insurance perspective. Make sure what your situation is before there is a problem!

Examples:

  1.  The neighbour reverses out of his yard and into your palisade fence. Will the damage be covered?  Since this policy covers
    impact with the private residential structures by animals, vehicles, aircraft or aerial devices or other objects falling from them, or falling trees except when felled by someone;
    It will be paid. (Your insurance will then claim from your neighbour or his insurance.)
  2. You see a guy along the road with a chain saw advertising that he trims trees. You hire him to cut a few branches from your tree overhanging your house. In the process one of the heavy branches falls on the roof of your house and causes damage. Will the claim be paid? No, because it is felled by someone.
  3. It is good to remember that insurance covers things that happens “suddenly and unforeseen.” Any gradual wear and tear or process is not covered.

CONFIRM

QuestionsOne of the basics rules of insurance is:  disclose. Be honest with your insurer and rather tell him more than less. At the same time, if you have a question like:  “Is my paving covered?” contact your broker or insurer. Perhaps it is not covered, but it can be. Perhaps it cannot be covered, for some reason, but then it is important that you know that.

If you have short term insurance related questions, you are welcome to contact me. Or leave a comment below.

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Lockdown Day 161 – 3 September 2020 – Mind Travels

“The sand in the hourglass runs from one compartment to the other, marking the passage of moments with something constant and tangible.
If you watch the flowing sand, you might see time itself riding the granules.
Contrary to popular opinion, time is not an old white-haired man, but a laughing child.
And time sings.”
― Vera Nazarian, The Perpetual Calendar of Inspiration – Goodreads

Lockdown Blues

Day 161 of Lockdown. In the last week or so, I became aware that lockdown is bearing down on me. Even a big introvert like myself is starting to feel the lack of real social contact. The eternal mask and hand sanitizer is becoming more than just a bit of a bore. Keeping up the vigilance against an invisible enemy is working on the stress levels.

Fortunately I am going to do a policy renewal with a client, that will bring some personal contact.

Mind Travel

And I can always go for a mind travel. I cannot explain why Bulungula is filling my memories this morning. It was a very special holiday and we did enjoy it a great deal. But then, we also had other special holidays. In fact, every holiday is special.

Canoodling at Bulungula

Canoodling at Bulungula

Was it that we felt young when we canoodled on the river with the change of tide? Canoodle is a fabricated word. Bulungula Lodge has these pool noodles that we used to float on the river. We were like kids. Racing each other up river, taking advantage of short cuts, getting bogged down in wet, muddy sand. Racing back down river on the tide, trying everything possible for some advantage to win the race. We were like kids again. That is what grandchildren does to an old man – makes him young again.

 

Showers, Baths

Memories of Bulungula are about rocket showers and a rocket bath. That rocket bath is something special. There is a piece of pristine forest, encamped to protect it against the goats. That is where the “luxury tents” are. This morning I wish I could have my morning coffee on the stoep of our tent,  just enjoying the bird sounds and looking out over the sea.

Enjoying a Bulungula Rocket Bath

Enjoying a Bulungula Rocket Bath

beaches with cows Buungula

Beaches with cows Buungula

Coffee on the Stoep Bulungula

Coffee on the Stoep Bulungula

On the top of the dune, there is the rocket bath. The water is heated by a fire under the bath. Bum protection is a plank board that you sit on. When the water gets too warm, you add more cold water. If it gets too cold, you add more twigs. And so you sit in the drizzle, snug in the bath, overlooking the beach. That is how life should be.

Cultural Experience

Bulungula from where we walked kilometers in many directions. Where a diverse cultural experience was enriching. We shared the lounge with people from England, Germany, Australia, Texas. How on earth do they come from all over the world to a place on the Wild Coast that most South Africans don’t even know of?

Ilanga Fire Restaurant

What about pancakes and orange juice at Ilanga Fire Restaurant. Here I must share background. In Gonubie is the Pancake House. Exquisite pancakes we had there. Although we might have been lucky, on that day.

Ilanga Fire Restaurant

Ilanga Fire Restaurant

Fellow Beach Lovers

Fellow Beach Lovers

Beaches to die for Bulungula

Beaches to die for

Bulungula is a tourist hub. There are other businesses that benefit from the tourists, as it should be. With the memory of Gonubie’s pancakes, we decided to support Ilanga Fire Restaurant. The pancakes were good, The orange juice turned out to be Oros. And somehow, the simplicity of the setting and the conversation with the local guide is what sticks in my memory.

Community

When you stay at Bulungula, you become part of a community. It is a community project. It was a new experience to stay at a Backpackers establishment. But it was a good experience. Over lunch and dinner you spoke to people from other parts of the world and got to see your own world through new eyes. It was good to see how a community cares for an autistic boy with love and acceptance.

But this morning, it is the open beaches of the Wild Coast that calls my name. The endless kilometers one can hike without seeing another human being. Leaving footprints as if you are the only people on earth. This morning it is the peace and calm of the Wild Coast that I crave.

Life, Memories & Community

In a previous post (Day 158) I said that life is made up of a series seemingly insignificant events that add up to a life. The thing is, these seemingly insignificant events are not just events, they make us what we are. They leave imprints. The leave memories. And that is how we can relive and re-interpret the past. Albeit, sometimes, with nostalgia. I am a richer man for the Bulungula experience. I will have a better day for dusting the memories.

I conclude my musings with the somewhat sad, somber song from CATS, by Andrew Lloyd-Webber – Memories. You can listen to it here. It is a somewhat sad, somber song with a happy ending, because as the last echoes of Grizabella’s song dies away, she is accepted back into the “family,” so to speak. Indeed a new day was breaking and new memories were in the making. Seemingly insignificant events made significant by and through others. Memories!

Midnight
Not a sound from the pavement
Has the moon lost her memory?
She is smiling alone
In the lamplight
The withered leaves collect at my feet
And the wind begins to moan
Memory
All alone in the moonlight
I can smile at the old days
I was beautiful then
I remember
The time I knew what happiness was
Let the memory live again
Every street lamp
Seems to beat a fatalistic warning
Someone mutters at the street lamp gutters
And soon it will be morning

Daylight
I must wait for the sunrise
I must think of a new life
And I mustn’t give in
When the dawn comes
Tonight will be a memory too
And a new day will begin
Burnt out ends of smoky days
The stale cold smell of morning
A street lamp dies, another night is over
Another day is dawning

Touch me
It’s so easy to leave me
All alone with my memory
Of my days in the sun
If you touch me
You’ll understand what happiness is
Look a new day has begun

 

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Lockdown Day 158 – 1 Sept 2020 – Focus

Life is made up of small, seemingly insignificant, events that ends up in a life.

The MBO Seminar

One such event was a seminar I attended way back in 1989. A management-leadership training seminar. Those days it was all about Management by Objectives. Then somebody did another PhD and MBO was replaced by something else. And the process keeps repeating.

My Memories

I remember two things about that 3 day seminar:
1. One lunchtime we were playing cricket. With the last ball of the session one of the players were bowled middle stump. As we were going in, he was rather white in the face. Somebody asked him: “What are you going to tell Elaine (the presenter) if she asks you why you look like this?” He answered, in a funny sort of voice, “I will say if the ball hit her where it hit me, it would have been a miss.”
2. The second thing I remember, is that we spend a lot of time on the idea of focus.

Focus

Life out of fucus

That seminar had a direct influence on me enrolling for an MBA the next year.

As many of you will know, I love photography – writing with light. Photography is about focus. Crisp, razor sharp focus. And today I am somehow, thinking about focus.

What you focus on, is what you get. That is especially true with macro-photography. You focus on the eye of the bee and the wings are blurred. Which is absolutely fine if you wanted to photograph the eye in the first instance.

Focus

Sometimes I am out with another photographer and we would take photos of the same scene. We will compare our photos. It is always amazing how the same scene can differ because of two different focal points. You suddenly have two printable photos of the same scene seen through different lenses.

Here is the thing: even if we tried, we cannot take the same picture!

Life is the same! We see the same event through different lenses. We focus on different aspects of the same event. We see different things in the same event. That could be anything, from farm murders, BLM, Covid-19, Lockdown, a joke, a brand of car, food or service, anything and everything.

The challenge is to at least try and see where the other person focused when he took the photograph.

Using depth of field to hide a chaotic background

Focus can hide a lot of things. In photography it is called “depth of field.” It refers to the effect of getting the fore- and background in or out of focus. Sometimes you want to show a scene from here to the horizon – many things must be in focus.
Other times you just want the object of the photo to be in focus. It might be that you see this lovely flower, but the background is a mess, or there is something in the background that will distract the viewer from the photo and you want them to see the photo.

 

You can even see my earthworm farm! Nothing hidden here.

Once you understand the technique, it is good to experiment.

In life there are many examples where people use this same depth of field focus technique, depending of where they come from or where they want you to go. I am not sure why, but it happens.

If it is beneficial, people would like to use a laser, pinpoint focus, cutting out all the noise, background and context. It connects with what I said about statistics in a previous post. It is up to us to enquire about context.

Context

Years ago there was a game on TV, I think. Contestants had to guess where people were (context) based on facial expressions. This particular evening there was a very stern face. Contestants had all sorts of ideas. Nobody got it right. When the photo was fully zoomed out, the man was walking from a church. You see, in everything, context matters.

Context could be deliberately disguised for some reason  or the context can be in our own minds. Because I am scared, everything becomes a threat, if you understand what I am trying to say. We must be aware of it. Our own context can ruin many things.

Puzzles

I like the big picture (despite I love taking close-up photos). I want to see the big picture before I study the detail. It is like looking at the picture of a puzzle before putting the piece in the right place. It just does not make sense to ignore the big picture and try to build a puzzle by trying to fit the pieces – like building upside down!

But the big picture can also hide a lot of things. We cannot just look at the big picture, because too often decisions are made on the detail.

That is the nice thing about a camera – you can come closer and farther away. Focus closer or farther away. You can zoom in or out.

Beware of Wrong Focus

One morning on the radio somebody spoke about a fundraiser for some disease. About 250 000 people worldwide suffered from this particular disease. Percentage wise it is nothing. I mentioned this to a hiker friend who works in the medical research field and said I don’t understand this. I would rather spend time and money on research where 250 million people were involved. She changed the focus. It is not just about how many people suffer from the disease. The question is also about pain, discomfort, and other effects of the disease. Now, yes, if 250 000 infants live in pain because of this disease, it makes sense. (It makes sense, anyway, fortunately, for some people. My focus is inconsequential.)

Where you Focus

Where you focus is what you see – young girl or old woman?

With focus, we show people where we want them to look, we show them what we want them to see. But it is not just the photographer that uses focus – our own minds, our own backgrounds, interests, experiences, training and prejudices are a lens. We see everything through our own lens.

This photo on the left also comes from that MBO seminar. Where you focus is what you see – a young girl or an old woman. And once you see it, you always see it!

 

In life, and this I realize more and more, you have to focus to succeed. In the modern world more than ever.

What do you think? What is your experience? Please leave your comments below.

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There is a Tide in the Affairs of Men

“There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.”

Julius Caesar Act 4, scene 3

And Helen Keller Rice said:

“Life is either a daring adventure, or nothing at all.”

DO OR DIE

This post has a bit of a background.

DEVILS PEAK

  1.  The evening before my knee replacement, on 10 Feb 2020, my wife and I had pizza at Blouberg. I was more than a bit despondent. Because of an Achilles injury, I could not hike for more than a year. I visited the Biokineticist weekly for 6 months and I really get well and fit. I look forward to an active December holiday in Transkei and Hogsback. I dream of all the hikes and cycling. On 10 December, when I get out at Dwesa, my knee is too sore to walk. All my dreams of walking km’s gone. Including the dream to visit Disas on Table Mountain in Feb 2020.Devils Peak

    As I look at Table Mountain on the eve of my operation, thinking of all my good times on that spectacular piece of sandstone, I decide that my first real hike with the new knee will be Devils Peak. Not too long, not too difficult, but still a serious hike.  During Lockdown, walking as much as possible, I decided that 6 months is a mile stone in the healing process. 5 September is the first Saturday of Spring, just short of 7 months.

    Either, I am a Devils Peak Hero (and I kept a Devils Peak Hero in the fridge for a long time to celebrate at beacon top), or I will fail trying.

    A REAL HERO

  2. The second background story I read this morning on Linkedin.Salute In 2006 he started working as delivery man at R300 per week. What he saw in the houses where he made deliveries became an inspiration.  That inspired him to enroll for Matric in 2007. Not an easy feat for somebody who left school after Standard 6 due to circumstances. In 2007 his name was in the newspaper – he has a Matric Certificate. 2008 he got a job as gardener. Later a better job where Matric was a requirement. On 18 Aug 2020 he received his certificates – a National Diploma in Law and an LLB from UNISA.

My own dream of Devils Peak fades to nothing against this accomplishment.

THE PRICE OF DREAMS

That is what made me think of the Shakespeare quote above.

We have to accept the challenges. We have to challenge ourselves. Everything we dream of, lies beyond or comfort zone. Everything we want, requires us to take another step higher. That is where fortune lies, says Shakespeare.

And if we stay at the bottom, looking up at Devils Peak, dreaming about Disas, but never venturing out? If we stay in the position as a delivery man, just envying the people who receive the deliveries?

Omitted, all the voyage of their life
Is bound in shallows and in miseries.

The best part is – it lies with us. I must take the chance that I may not get to beacon top on Devils Peak. But, unless I take the risk, I will never know.

Unless we take the first step, unless we keep on putting a foot on the next step, we will never know.

Price vs Reward

Following our dreams has a price tag. But achieving our dreams has a reward. As long as the reward outweighs the price, it is fine!

Not following our dreams, also has a price. Perhaps the most costly price of all! Is there a reward, though?

I’d rather die trying, than die with the wish.

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Take Cover – Would You Pay This Claim? #2

If I were to believe the good people of the movie “My Fair Lady,” “The Rain in Spain falls mainly on the plains.” It is raining in Cape Town now, and I promise you, it falls everywhere.

Rain and leavesYou probably wonder how rain, Spain and insurance all get together? Well, you see, the rain that falls on the roof of my house runs into the gutters. If the gutters cannot handle the run-off, the water may go where it should not and cause damage. And that could lead to an insurance claim. And that claim may be paid – or not.

And that is the topic of this post.

IF YOU WERE THE INSURER – WOULD YOU PAY THIS CLAIM?

Image by sandid from Pixabay.com

We are busy with a series of posts to help us understand our short term insurance better. If we understand our insurance, we can make more informed decisions as to what to cover and what not. Or how to cover it. Or perhaps decide we will rather not cover some items.

 

 

Once again I urge you to study your own policy wording or speak to your broker. Please do not take this post as advice, because I am working on a “generic” policy wording. Furthermore, your circumstances and needs are unique.

Water Damage is An Insured Peril

Normally, a personal policy that covers your house and/or content will cover you for water damage. That means, if you have Building Cover (i.e. the structure of your house) and the water overflows the gutters and their is damage to soffits or ceilings, the insurance would pay.

If that overflow causes damage to the content of your house (and the content is covered according to the schedule), this damage will also be covered.

The reason I am thinking of this, is that recently, while out walking for my lockdown exercise, I noticed a house with an “elevated garden.” The gutters were overgrown – you have probably seen houses like that. I have a lot of trees on the yard and have to clean the gutters regularly. It always amazes me how quickly leaves accumulate in the gutters.

Would You Still Pay The CLAIM IF …

Let’s suppose with the rain today the water damage described above happens at this house with the “elevated garden.” Will the insurance still pay? What is your feeling? The gutters are blocked. The water has to overflow and go where it should not go?

DUTY OF CARE
You must take all reasonable precautions and all reasonable care to prevent or minimise loss, damage, death, injury or liability.

If you read your policy wording, you will probably find a requirement like the one above somewhere in there.

Looking at this requirement, the questions is, did the owner of the house under discussion take reasonable care?

will the assessor pay

ruta-celma unsplash.com

Based on this clause, am doubtful whether an assessor will approve the claim!

Insurance covers you against sudden, unforeseen events. Any deterioration over time is also excluded. There is an onus on us to maintain our possessions. Unfortunately, the normal short term insurance contract is not a maintenance contract.

 

The principle of care is very important.

  • Leaving a bicycle unlocked while you have breakfast after a ride – can you claim that you have exercised reasonable care if it is stolen?
  • Leaving your car unattended with the keys in the ignition – did you take care? (I once left my car in Knysna in a parking lot with the keys in the boot! Middle of December holiday. When I got back the car guard stood at my car – he got a good “Christmas” that day!)
  • Leaving your front door unlocked and the house unoccupied – in a case like this it is not even burglary!

The principle today is – to get claims paid without hassle, take care of your possessions.

I love this saying:

“Insure what you have. Live as if you have no insurance at all.”

What are your thoughts? Please comment below. You are also welcome to post your Short Term Insurance related questions below.

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Lockdown Day 152 – 26 Aug 2020 – Question

I like the Moody Blues. They still make good Music.

I recently thought about questions, and that made me think of the Moody Blues song, Question. The YouTube link below.

“Question”

Why do we never get an answer
When we’re knocking at the door
With a thousand million questions
About hate and death and war?

’cause when we stop and look around us
There is nothing that we need.
In a world of persecution that is burning in its greed.

Why do we never get an answer
When we’re knocking at the door?
Because the truth is hard to swallow
That’s what the war of love is for.

It’s not the way that you say it
When you do those things to me.
It’s more the way that you mean it
When you tell me what will be.

And when you stop and think about it
You won’t believe it’s true.
That all the love you’ve been giving
Has all been meant for you.

I’m looking for someone to change my life.
I’m looking for a miracle in my life.
And if you could see what it’s done to me
To lose the love I knew
Could safely lead me through.

Between the silence of the mountains
And the crashing of the sea
There lies a land I once lived in
And she’s waiting there for me.

But in the grey of the morning
My mind becomes confused
Between the dead and the sleeping
And the road that I must choose.

I’m looking for someone to change my life.
I’m looking for a miracle in my life.
And if you could see what it’s done to me
To lose the love I knew
Could safely lead me to
The land that I once knew.
To learn as we grow old
The secrets of our souls.

It’s not the way that you say it
When you do those things to me.
It’s more the way you really mean it
When you tell me what will be.

Why do we never get an answer
When we’re knocking at the door
With a thousand million questions
About hate and death and war?

When we stop and look around us
There is nothing that we need.
In a world of persecution that is burning in its greed.

It started with my frustration with somebody repeating the same, unproductive, question over and over.

Basically there are four questions. How, What, When and Why.

As a youngster there was a series of books – The How, What and When Series. I still have some of them. “How Levers Work” is on my shelve and the knowledge in my head! When was about history, those I did not buy. How things work, What Things do and How they do it, that still fascinates me. Later in life, I discovered that it is important to know history. Not to fight with it, because that is a waste of time. Even if you could burn Rhodes a million times, it will not change history. But study what Rhodes did and how he did it and perhaps you will find parallels in the modern world? Perhaps you will think twice before accepting too many Chinese gifts, or am I seeing things? When I was 12 years old, When did not interest me. Now I know better.

Anyway, my thoughts were about questions. We had a laptop problem. How the problem developed is important – up to a point. “Why do we not have a key?” I do not know. It does not matter how many times you ask me “Why don’t you have a key?” the answer will always be the same. Yes, it is stupid. Yes, it is negligent. Yes, it is everything. But it is history. But we have wasted so much time going round and round and round. And the most important question is: “Can you fix it?”

It made me think of these questions – how, why, what, when. Can I just ignore any of these questions? The answer is a definite and resounding “NO!” But they must be used correctly and perhaps in the right sequence?

We need to think how we use these questions. Sometimes “How” refers to the past, sometimes to the future and sometimes to the present.

Listen to this: “What did you do? How did you do it? When did you do it? Why did you do it?” Will the answer be the same if I ask “When did you do it? How did you do it? Why did you do it? What did you do?” I doubt I will get the same answer.

How did it happen? refers to the past. It is important, because the development of the problem may suggest a solution. But dwelling in the past is very unproductive. “How are we going to fix it” – that is present and future.

It seems all these interrogatives can be used looking back or looking forward. “Why did you do it?” as opposed to “Why are you doing it like this?” Both are important to know. Both can lead to very productive discussions. But we cannot change history!

When (there it is again!) I was about 11 years old, I had an accident with my dad’s brand new bakkie. Despite the fact that I was very careful. The question is “how did it happen?” To this day I am very aware that if a vehicle drops into a hole it will move sideways and i have no control over that movement. Productive how. But dwelling on that event is unproductive. Today the question is “How do you prevent something similar?”

And the point is, we need to think about our questions. Why (there it is!) is it important to have the information that I am asking for? How will the information serve the purpose? What will I do with the information? When will I use the information? Or I am I just asking out of curiosity and because I am a gossip?

Edward de Bono wrote a book called Practical Thinking. He opened my mind to accept something that used to irritate (the hell out of) me. I could never handle it when somebody “stated the obvious.” Then De Bono investigates the levels of answers to a problem, opening with stating the obvious! His conclusion is that even stating the obvious, somebody gives some information. By saying “It fell,” the person is saying it did not drop, it was not thrown, it was not …


Unfortunately De Bono did not offer any help for my frustration when I have to repeat myself ad infinitum. De Bono does not offer any helpful suggestion when people start asking irrelevant questions. “I saw an accident today.”  “Was it a blue car or a red car?” The problem is, sometimes these irrelevant questions turn out to be very relevant!

I just cannot win! “I need a miracle in my life!”

(Oh, I forgot about where! Just imagine “where were you when the laptop did the update? Perhaps.)

 

 

 

 

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Take Cover – Understanding Short Term Insurance (#1)

In this series I will try to unpack short term insurance for you.

Knowledge is Power

A knowledgeable client is a good client. Understanding insurance makes it easier to make decisions on what your insurance should look like. Client and broker are partners identifying risks and finding the best solution to mitigate the risk. This leads to a good claims experience.

This first video, I will look at the history of insurance and how it all started.

THIS IS NOT ADVICE. Please consult a financial advisor before making changes to any financial portfolio. I trust the knowledge you will gain here, will beneficial in the process of discussing your insurance need.

Insurance

Insurance is a system of spreading the risk of one onto the shoulders of many

A shared burden is a lighter burden

 Camel Traders of Babylon

Insurance goes back a very long time. Even the Camel Traders of Babylon had some form of insurance.  (Link in description) called Bottomry. It dates to 4000BCE. The merchandise was financed. In the event the merchandise was lost, the loan was cancelled. The interest was considered an insurance premium.

The Sailors Discovering Trade Routes

When sailors like Columbus, Diaz, and others started circumnavigating the earth in the 15th century, the financial risk became very high. The ships were expensive and one needed capital to build it. The cargo was equally valuable. Imagine a shipwreck at the Cape of Storms and ship and cargo is lost. A huge financial setback for everybody.

The first form of insurance was to spread the cargo over many ships. That way, if one ship were lost, the owners would not lose their whole investment in the cargo as well. That was the first instance of shared burden.

Lloyds

There was a coffee shop in London, Lloyds, where all the merchants would meet. It became a clearing house for information. Who is sailing where; who has cargo to ship or who has capacity to ship some more cargo.

In time people saw an opportunity to insure a ship and cargo at a premium.  This was a better option than the spread cargo option.

And that, in a nutshell, is how our modern insurance started. Some ships will be lost, the insurer would pay the agreed amount, but the premiums were more than the claims.  That means there was a profit and reserves accumulated.

The principle is still the same – risk shared over many shoulders.

In modern times, the risk is spread between clients, insure and re-insurance companies to ensure the system can carry the load. Furthermore, it makes sense to also spread the risk over a wide geographical region and diverse industries.

To understand this, imagine all the clients live in a hurricane prone area. Then the risk is not spread well and too many simultaneous claims can hurt the system or premiums would be too high. It is the nature of insurance that if one hurts, everybody hurts. The worst conceivable thing is an insurance company going bankrupt!

Summary

For insurance to work, every stakeholder must play his or her role:

The insured premium payer must pay his premium and not try to get an advantage over other insureds

The insurer must underwrite the risk properly to ensure that they operate profitably

Re-insurers must underwrite their risk properly to ensure the integrity of the whole system

Risk must be spread over a variety of clients over a big geographical area to protect against natural disasters, such as hurricanes. It makes sense to spread the risk over diverse industries. Actuarial science ensures that one industry or region do not subsidize another.

And that is the history and principles of the wonderful product called insurance.

Please leave comments below. You are welcome to post short term related questions as well.

Further Reading
Britannica

IedU

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I Just Have to Share This!

It is the journey that counts. It is the long term profits that count. It is the consistency that counts. Nothing else matters!

Whether it is a relationship, a unit trust, a company or a Forex trade, it is the long haul that matters. I always get such an exasperated feeling when the investment world gloats in a 3 month or even 6 months return. It is a waste of time!

Show me your annual returns for 10 years against inflation, against the market. THAT is what counts.

‘Nough said!

Now watch this!

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The Top 10 Short Term Insurance Companies

How would you rank the top 10 insurance companies?

  • Market capitalization
  • Number of clients
  • Reserve funds
  • Number of employees
  • ?? – Please comment below, I would love to hear your thoughts

My Background

I am a short term insurance broker in Cape Town, South Africa. My business is a business within a business. The reason is simple. I want to offer personal service. There must be a personal relationship between me and the client, because that is what I like. At the same time, this limits my business, should I run a one-man-show. Now I am part of a very big brokerage which gives me access to many insurance companies. It also gives me an infrastructure of claims-handlers and underwriters. It is a win-win for everybody – especially the client.

This is important. Since I regularly see my clients in social settings, I want to look them in the eye knowing I gave them the best deal!

How I Choose the Top Insurance Company

This is how I choose the top insurance company.

  • Policy Wording: the policy wording must not be limiting and have a lot of exclusions. For instance, one of the things I look for, is that your household content should be covered away from your house as if in your house.
    Real Life Example:

    A client is on vacation and buys a laptop. She drives home, puts the laptop on the dining table (unopened!) and goes for a stroll on the beach. Coming back she discovers a burglary and the laptop gone.

    That laptop was paid out under the content section of the policy!

    I read and compare policy wordings.

  • Premium Income:  The company must be big enough in terms of premium income and reserves that I am confident that it can pay claims, even when there is a major disaster. The principle of insurance is that many people contribute small amounts so that there will be enough money to cover a huge loss. There must be enough money to pay for that loss.
  • My Resources: The benefit of how I work, is that I can go to a colleague or one of our claims handlers and ask them: “What is your experience with company Y? How do they settle claims.” You see, I can usually warn a client when a claim is not a claim. Sometimes claims are borderline – I will inform the client even when submitting a claim. But when a claim is a claim, I don’t want a company that starts asking silly questions or who suddenly requires reams of paper to confirm a claim. If it is a valid, clear cut claim it has to be paid promptly.
Real Life Example:

in one specific niche, I have the option of three companies, A, B and C. C has the best policy wording by far. I know the CEO and before I started using them, I had coffee with him. Since I am the only one at the office in this niche, I could not ask references.

After the coffee, I place a client with with insurer C, disclosing the fact that I have no track record, other than the CEO. Then a claim arises. It is no doubt a claim. But the claims manager is too clever by far and starts coming up the most preposterous reasons why it is not a claim.

Fortunately the CEO steps in, the claim is paid and I move the client to another company.

The Non-Essentials

What I do not look at.

Premium: Obviously premium is important. But it is not the main consideration. This is over simplified, but consider this. I am living in my house for 23 years. Whether it is company E, F or G, the risk is exactly the same. I disclose exactly the same claims. Why would the premium vary by a huge amount?

Real Life Example:

One of our clients cancels a policy (with some attitude) because one of the direct insurance companies offers him a R200 saving.

Before the end of two months he is back. He had an accident and discovered the excess is one ridiculous amount.

Is it worthwhile to save R100 on premium to have an excess two or three times higher?

  • The Bells and Whistles: The only add on that I am really interested in, is the assist. What assistance do I get when I am in a car accident? Do they offer home assist when the geyser goes over a weekend, for instance? What is the quality of that assist? I am not interested in cash back, clubs, etc. Short term insurance is there to cover my risks. That is what it should do.
    Real Life Example:

    I test a company by taking my personal insurance to them. One Sunday afternoon we go to a concert in Stellenbosch. It is rainy and the headlights are on as we drive. My wife is involved with the concert and I read while I wait.

    Somebody warns me the headlights are on. I realise the battery is flat.

    After the concert, while I wait for my wife, I phone assist. I wait. Fifteen minutes later I phone again. No progress. After 45 minutes my wife comes back. We are the only car on the parking lot. Fortunately I can flag somebody driving by to help me.

    As my luck would have it, Monday morning when I walk into the office, the person in charge of that assist is visiting us. I tell him my experience. He answers: “But you only pay R5 per month for that service.” The point is, I pay for it, you have to provide it. Fortunately all this happened in a managers office. Two months later there was another company looking after assist.

    If you have it, it must be reliable.

Conclusion

You have insurance to protect you against the bad things that life brings on our way.

When the wind blows the roof off, being member of an exclusive insurance club is irrelevant. What matters is how quickly and efficiently the insurance company will settle your claim and help you.

When I select an insurance company for a client, I try to optimize premiums, cover (benefits) and service.

And that is my top insurer for that client!

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Why You Should Always Use Your Own Insurer

It often happens that somebody is innocent in an accident. Or believe they are, which is not the same thing.

Then they want to put in a third party claim against the guilty party’s insurance. This is a bad idea for two reasons.

CASE 1

I have an appointment with a prospective client. When we discuss his insurance needs, he tells me he had an accident. As a civil engineer on site a sub-contractor reversed into his parked vehicle. He reported the accident to his insurance, but then decided it will affect his no-claim bonus and therefore put in a third party claim against sub-contractor’s insurance.

He was about to settle for R8 500. I advised him not to settle, it was day 28 and the claim must be submitted within 30 days. We could wait with the broker’s appointment until the claim was settled.

He followed my advice and re-opend the claim with his insurance. When the panel-beaters started opening up his car, they discovered more damage. The total claim increased to R45 000. That is a far cry from R8 500. And, as you know, once you settle for full and final settlement, the difference is for your account.

The Story Continues

Insurance Covers You

Insurance Covers You

This story has a sequel. His work took him to Oudtshoorn. He wanted to buy a new car, but the salesman said he cannot trade in his vehicle, since the accident damage was not repaired properly. I contacted the insurance company, an assessor agreed the work was shabby and the car was repaired properly.

I think that was good advice to claim from his own insurance, don’t you think?

CASE 2

This is the next reason you claim  from your own insurance.

The third party phones me and says my client is guilty and he wants to put in a claim against my client. I “advise” him to claim against his own insurance. But it is a no claim bonus, excess and cash back bonus and what have you and he wants to claim directly.

He wants to claim directly. So this is what I tell him:  “Make a note. My best advice is to claim against your own insurance. You are not my client I cannot really advise you, and I do not handle your claim. In fact, our office does not even do it. It goes to the legal department, somewhere. You are not their priority. You do not pay us a premium, so you are not a client. You are a claimant.

“But, since you want to do this, send us a letter of demand and three quotes.”

“But my insurance only requires one quote!”

“I just told you we are not your insurance! If you claim from your insurance, they only require one quote and their legal department will work with our legal department. But now you want to do all that yourself. We need a letter of demand and three quotes.”

As time goes by and he deals with the legal guys, he phones again. “If I knew it was going to be this much trouble …” ? Remember I warned you? You did know. There is nothing I can do. That is the process.”

(As jy nie wil hoor nie, Boeta! Sometimes people do not have their own insurance and my heart bleeds for them! It is not a process I would choose for myself).

Your No Claims Bonus

Let me put your mind at ease about No Claims Bonus.

Cashback BonusFirstly, it is only your no claims bonus on the specific vehicle that will be affected. That means it is only the premium on that vehicle that is affected. Normally not a huge amount.

Secondly, your insurance will start the process to recover their money. When they do recover the money, they will also try to recover the excess you had to pay. Sometimes it takes a long time.

The moment the recovery is finalized, your no claims bonus will be re-instated.

CASH BACK POLICIES

My opinion on Cash Back Bonuses:

Since people normally only die once, I can see a benefit for a cash back on a life policy.

But please do not be so naïve to think the cash back is free! Show me any company who can give you 5% or 10% or more back from their turnover or profit and I will show you a company who over charges. Business is too competitive to work at these extreme margins.

And a cashback will only prevent small claims that people can easily pay from their own pockets.

So the cash back is another insurance policy that you pay for. If you do not claim, then the insurance looses the bet, and you get a very handy cash bonus. Often it is a life saver!

(If you do not believe me that you pay for the cash back, ask for a quote with or without a cashback.)

Penalized Once, Twice, Thrice

A without cashback policy penalizes you in two ways for an accident: you pay an excess and loose 2 years on your no claims bonus.

If you have a cash back policy, you loose your cash back, too! Even if it is on the last day before you become entitled to the cash back! Triple Whammy!

This is just my opinion, you may feel differently. That is fine by me. If you have received a cashback or two, you will think I am a fool. That is also fine by me!

That is why I will never go for a cash back policy. Last time I did a quote on a life policy with and without cash back, I decided I can do much better by saving the extra premium with Capitec. Only I did business with a company with no cash back.

Since I am writing about short term insurance, let me add that the companies that disclose the cost of cash back options, it is not a significant premium.

 

 

 

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