you are here:
Homepage
>
Buildings
Insurance
>
Insurance Company Claims (Basic Principles) >
Insurance Claims - Some Basic Principles...
Introduction -
insurance is purchased to
provided us with cover against a financial loss should an unforeseen occurrence
happen to cause damage or destructions to our possessions. Of course, we all
hope this will never to us but each year insurers are faced with large payouts
following Accidents, Fires & Floods. Claims totally many thousand of pound are
now reasonably common. How will your claim be handled and the procedures
to follow are laid down in your policy document and details of how to make a
claim are presented to you when you accept policy cover. It is a good idea to
tell your insurers as soon as possible and they will want to discuss matters
with you at the earliest opportunity. Before confirming that a claim is valid
under your policy document, your insurers will need to check that cover is
actually in force for the loss that has occurred. The insurers will want to know
when and how the loss happened, for claims involving Theft or a Loss; they will
want the incident reported to the police and an appropriate reference number
obtained
Policy Wording - every loss is the effect of some cause, and this is the
starting point to discover if your claim will be valid. Most modern policies
cover a wide range of eventualities and your loss may be the result of a single
cause or a chain of events. However a loss occurs, it is essential that the
cause falls within the scope of your policy wording. The basic principle which
governs this is caused Proximate Cause. Proximate cause is the active efficient
cause that sets in motion a chain of event that brings about a result without
the intervention of any force started and working actively from a new and
independent source. Well that statement may be a little difficult to grasp, so
consider this scenario.
If you have a building insurance policy which covers Fire but excludes Water
Damage and a Fire occurs at the property. The Fire Brigade turn up and the bulk
of the damage to your property is caused by the Fireman saturating your property
with water then the insurers will pay the claim as the proximate cause will be
deemed to be Fire. Establishing proximate cause can be a complicated task
but insurers are very fair when deciding if a peril is insured or not.
Paying Your Claim - when deciding to pay your claim, your insurers will
want to know if you have any other policies in force under which you may
possibly be able to submit a similar claim. Where it can be established that
more than one insurer is involved in a loss, then a principle known as
contribution comes in to play. Under the contribution clause, your
insurer can call on another insurer to pay part of the claim but
necessarily an equal amount. An example would be a claim for loss or damage
caused to your possessions whilst on Holiday, it is fairly common for a Holiday
Insurer to enquire if you have an All Risks section under your Home insurance
policy. If you have, your Holiday Insurer may wish to ask them for a
contribution.
Subrogation - the insurance principle of Subrogation, prevents an insured
person from “making a profit” from a claim. Subrogation can be defined as the
right of one person (in this case your insurer) to stand in place of
another and to avail themselves of your rights and remedies. Therefore, if your
insurance company has paid your claim, they will then have the right to recover
their loss from any party that they can prove is responsible for the occurrence.
Insuring your property for the correct value is of paramount importance and you
should spend time in making sure that your sums insured are up to date an
accurate. Under most Property insurance policies, the insurers will have a
clause Known as Average. This condition has the effect of reducing any claim
that you may make under your policy in direct proportion to the amount of under
insurance. For example if you insure your Building for £100,000 but should have
insured it for £200,000 then a £5000 claim will be reduced to £2500 less any
policy excess. It is thus vitally important to make sure your sums insured are
accurate and more details to this effect can be found on our Guide to Insuring
your Buildings & Contents page.
