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Sunday, August 16, 2009
Assumption reinsurance
Assumption reinsurance is a form of reinsurance whereby the reinsurer is substituted for the ceding insurer and becomes directly liable for policy claims. This ordinarily requires a notice and release from affected policyholders. In the more typical reinsurance arrangement, the reinsurer has an obligation to indemnify the ceding insurer, which remains liable for claims on policies it has issued, and policyholders' approval is not required.
Financial reinsurance
Financial reinsurance, also known as fin re, is a form of reinsurance which is focused more on capital management than on risk transfer.
One of the particular difficulties of running an insurance company is that its financial results - and hence its profitability - tend to be uneven from one year to the next. Since insurance companies want, above all else, to produce consistent results, they are always attracted to ways of hoarding this year's profit to pay for next year's possible losses. Financial reinsurance is one means by which insurance companies can smooth their results.
A pure fin re contract tends to cover a multi-year period, during which the premium is held and invested by the reinsurer. It is returned to the ceding company - minus a pre-determined profit-margin for the reinsurer - either when the period has elapsed, or when the ceding company suffers a loss.
Fin re therefore differs from conventional reinsurance because most of the premium is returned whether there is a loss or not: little or no risk-transfer has taken place.
History
Fin re has been around since at least the 1960s, when Lloyds syndicates started sending money overseas as reinsurance premium for what were then called roll-overs - multi-year contracts with specially-established vehicles in tax-light jurisdictions such as the Cayman Islands. These deals were legal and approved by the UK tax-authorities. However they fell into disrepute after some years, partly because their tax-avoiding motivation became obvious, and partly because of a few cases where the overseas funds were siphoned-off or simply stolen.
More recently, the high-profile bankruptcy of the HIH group of insurance companies in Australia revealed that highly questionable transactions had been propping-up the balance-sheet for some years prior to failure. To be clear, although fin re contracts were involved, it was the fraudulent accounting for those contracts - and not the actual use of fin re - which was the problem. As of June 2006, General Re and others are being sued by the HIH liquidator in connection with the fraudulent practices.
The regulator's perspective
When looking at the financial position of a Life insurer, the company's assets and liabilities are measured. The difference is called the 'free assets' of the company. The greater the free assets relative to the liabilities, the more 'solvent' the company is deemed to be.
There are different ways of measuring assets and liabilities - it depends on who is looking. The regulator, who is interested in ensuring that insurance companies remain solvent so that they can meet their liabilities to policyholders, tends to under-estimate assets and over-estimate liabilities.
In taking this conservative perspective, one of the steps taken is to effectively ignore future profits. On the one hand this makes sense - it's not prudent to anticipate future profits. On the other hand, for an entire portfolio of policies, although some may lapse - statistically we can rely on a number to still be around to contribute to the company's future profits.
Future profits can thus be seen to be an inadmissible asset - an asset which may not (from the regulator's point of view, anyway) be taken into account.
A banker's perspective
If a bank were to give the insurer a loan, the insurer's assets would increase by the amount of the loan, but their liabilities would increase by the same amount too - because they owe that money back to the bank.
With both assets and liabilities increasing by the same amount, the free assets remain unchanged. This is generally a sensible thing, but it's not what financial reinsurance is aiming for.
The reinsurer's perspective
In setting up a financial reinsurance treaty, the reinsurer will provide capital (there are a number of ways of doing this, discussed below). In return, the insurer will pay the capital back over time. The key here is to ensure that repayments only come out of surplus emerging from the reinsured block of business. The benefit of this surplus-limitation comes from the fact that in the regulatory accounts there is no value ascribed to future profits - which means the liability to repay the reinsurer is made from a series of payments which are deemed to be zero.
The impact is that there is an increase in assets (from the financing), but no increase in liabilities. In other words, financial reinsurance increases the company's free assets.
Different accounting regimes
It's important to be clear that financial reinsurance has an impact on the regulatory balance sheet only - which itself already provides a distorted view of a company's solvency. Financial reinsurance, certainly for life insurers, has no impact on their GAAP accounts. It does not disort a company's shareholder-reported profits.
A lot of the bad press around financial reinsurance is because of inappropriate designs and incorrect accounting for the transaction. It is not a problem of financial reinsurance itself.
One of the particular difficulties of running an insurance company is that its financial results - and hence its profitability - tend to be uneven from one year to the next. Since insurance companies want, above all else, to produce consistent results, they are always attracted to ways of hoarding this year's profit to pay for next year's possible losses. Financial reinsurance is one means by which insurance companies can smooth their results.
A pure fin re contract tends to cover a multi-year period, during which the premium is held and invested by the reinsurer. It is returned to the ceding company - minus a pre-determined profit-margin for the reinsurer - either when the period has elapsed, or when the ceding company suffers a loss.
Fin re therefore differs from conventional reinsurance because most of the premium is returned whether there is a loss or not: little or no risk-transfer has taken place.
History
Fin re has been around since at least the 1960s, when Lloyds syndicates started sending money overseas as reinsurance premium for what were then called roll-overs - multi-year contracts with specially-established vehicles in tax-light jurisdictions such as the Cayman Islands. These deals were legal and approved by the UK tax-authorities. However they fell into disrepute after some years, partly because their tax-avoiding motivation became obvious, and partly because of a few cases where the overseas funds were siphoned-off or simply stolen.
More recently, the high-profile bankruptcy of the HIH group of insurance companies in Australia revealed that highly questionable transactions had been propping-up the balance-sheet for some years prior to failure. To be clear, although fin re contracts were involved, it was the fraudulent accounting for those contracts - and not the actual use of fin re - which was the problem. As of June 2006, General Re and others are being sued by the HIH liquidator in connection with the fraudulent practices.
The regulator's perspective
When looking at the financial position of a Life insurer, the company's assets and liabilities are measured. The difference is called the 'free assets' of the company. The greater the free assets relative to the liabilities, the more 'solvent' the company is deemed to be.
There are different ways of measuring assets and liabilities - it depends on who is looking. The regulator, who is interested in ensuring that insurance companies remain solvent so that they can meet their liabilities to policyholders, tends to under-estimate assets and over-estimate liabilities.
In taking this conservative perspective, one of the steps taken is to effectively ignore future profits. On the one hand this makes sense - it's not prudent to anticipate future profits. On the other hand, for an entire portfolio of policies, although some may lapse - statistically we can rely on a number to still be around to contribute to the company's future profits.
Future profits can thus be seen to be an inadmissible asset - an asset which may not (from the regulator's point of view, anyway) be taken into account.
A banker's perspective
If a bank were to give the insurer a loan, the insurer's assets would increase by the amount of the loan, but their liabilities would increase by the same amount too - because they owe that money back to the bank.
With both assets and liabilities increasing by the same amount, the free assets remain unchanged. This is generally a sensible thing, but it's not what financial reinsurance is aiming for.
The reinsurer's perspective
In setting up a financial reinsurance treaty, the reinsurer will provide capital (there are a number of ways of doing this, discussed below). In return, the insurer will pay the capital back over time. The key here is to ensure that repayments only come out of surplus emerging from the reinsured block of business. The benefit of this surplus-limitation comes from the fact that in the regulatory accounts there is no value ascribed to future profits - which means the liability to repay the reinsurer is made from a series of payments which are deemed to be zero.
The impact is that there is an increase in assets (from the financing), but no increase in liabilities. In other words, financial reinsurance increases the company's free assets.
Different accounting regimes
It's important to be clear that financial reinsurance has an impact on the regulatory balance sheet only - which itself already provides a distorted view of a company's solvency. Financial reinsurance, certainly for life insurers, has no impact on their GAAP accounts. It does not disort a company's shareholder-reported profits.
A lot of the bad press around financial reinsurance is because of inappropriate designs and incorrect accounting for the transaction. It is not a problem of financial reinsurance itself.
Financial reinsurance
Financial reinsurance, also known as fin re, is a form of reinsurance which is focused more on capital management than on risk transfer.
One of the particular difficulties of running an insurance company is that its financial results - and hence its profitability - tend to be uneven from one year to the next. Since insurance companies want, above all else, to produce consistent results, they are always attracted to ways of hoarding this year's profit to pay for next year's possible losses. Financial reinsurance is one means by which insurance companies can smooth their results.
A pure fin re contract tends to cover a multi-year period, during which the premium is held and invested by the reinsurer. It is returned to the ceding company - minus a pre-determined profit-margin for the reinsurer - either when the period has elapsed, or when the ceding company suffers a loss.
Fin re therefore differs from conventional reinsurance because most of the premium is returned whether there is a loss or not: little or no risk-transfer has taken place.
History
Fin re has been around since at least the 1960s, when Lloyds syndicates started sending money overseas as reinsurance premium for what were then called roll-overs - multi-year contracts with specially-established vehicles in tax-light jurisdictions such as the Cayman Islands. These deals were legal and approved by the UK tax-authorities. However they fell into disrepute after some years, partly because their tax-avoiding motivation became obvious, and partly because of a few cases where the overseas funds were siphoned-off or simply stolen.
More recently, the high-profile bankruptcy of the HIH group of insurance companies in Australia revealed that highly questionable transactions had been propping-up the balance-sheet for some years prior to failure. To be clear, although fin re contracts were involved, it was the fraudulent accounting for those contracts - and not the actual use of fin re - which was the problem. As of June 2006, General Re and others are being sued by the HIH liquidator in connection with the fraudulent practices.
The regulator's perspective
When looking at the financial position of a Life insurer, the company's assets and liabilities are measured. The difference is called the 'free assets' of the company. The greater the free assets relative to the liabilities, the more 'solvent' the company is deemed to be.
There are different ways of measuring assets and liabilities - it depends on who is looking. The regulator, who is interested in ensuring that insurance companies remain solvent so that they can meet their liabilities to policyholders, tends to under-estimate assets and over-estimate liabilities.
In taking this conservative perspective, one of the steps taken is to effectively ignore future profits. On the one hand this makes sense - it's not prudent to anticipate future profits. On the other hand, for an entire portfolio of policies, although some may lapse - statistically we can rely on a number to still be around to contribute to the company's future profits.
Future profits can thus be seen to be an inadmissible asset - an asset which may not (from the regulator's point of view, anyway) be taken into account.
A banker's perspective
If a bank were to give the insurer a loan, the insurer's assets would increase by the amount of the loan, but their liabilities would increase by the same amount too - because they owe that money back to the bank.
With both assets and liabilities increasing by the same amount, the free assets remain unchanged. This is generally a sensible thing, but it's not what financial reinsurance is aiming for.
The reinsurer's perspective
In setting up a financial reinsurance treaty, the reinsurer will provide capital (there are a number of ways of doing this, discussed below). In return, the insurer will pay the capital back over time. The key here is to ensure that repayments only come out of surplus emerging from the reinsured block of business. The benefit of this surplus-limitation comes from the fact that in the regulatory accounts there is no value ascribed to future profits - which means the liability to repay the reinsurer is made from a series of payments which are deemed to be zero.
The impact is that there is an increase in assets (from the financing), but no increase in liabilities. In other words, financial reinsurance increases the company's free assets.
Different accounting regimes
It's important to be clear that financial reinsurance has an impact on the regulatory balance sheet only - which itself already provides a distorted view of a company's solvency. Financial reinsurance, certainly for life insurers, has no impact on their GAAP accounts. It does not disort a company's shareholder-reported profits.
A lot of the bad press around financial reinsurance is because of inappropriate designs and incorrect accounting for the transaction. It is not a problem of financial reinsurance itself.
One of the particular difficulties of running an insurance company is that its financial results - and hence its profitability - tend to be uneven from one year to the next. Since insurance companies want, above all else, to produce consistent results, they are always attracted to ways of hoarding this year's profit to pay for next year's possible losses. Financial reinsurance is one means by which insurance companies can smooth their results.
A pure fin re contract tends to cover a multi-year period, during which the premium is held and invested by the reinsurer. It is returned to the ceding company - minus a pre-determined profit-margin for the reinsurer - either when the period has elapsed, or when the ceding company suffers a loss.
Fin re therefore differs from conventional reinsurance because most of the premium is returned whether there is a loss or not: little or no risk-transfer has taken place.
History
Fin re has been around since at least the 1960s, when Lloyds syndicates started sending money overseas as reinsurance premium for what were then called roll-overs - multi-year contracts with specially-established vehicles in tax-light jurisdictions such as the Cayman Islands. These deals were legal and approved by the UK tax-authorities. However they fell into disrepute after some years, partly because their tax-avoiding motivation became obvious, and partly because of a few cases where the overseas funds were siphoned-off or simply stolen.
More recently, the high-profile bankruptcy of the HIH group of insurance companies in Australia revealed that highly questionable transactions had been propping-up the balance-sheet for some years prior to failure. To be clear, although fin re contracts were involved, it was the fraudulent accounting for those contracts - and not the actual use of fin re - which was the problem. As of June 2006, General Re and others are being sued by the HIH liquidator in connection with the fraudulent practices.
The regulator's perspective
When looking at the financial position of a Life insurer, the company's assets and liabilities are measured. The difference is called the 'free assets' of the company. The greater the free assets relative to the liabilities, the more 'solvent' the company is deemed to be.
There are different ways of measuring assets and liabilities - it depends on who is looking. The regulator, who is interested in ensuring that insurance companies remain solvent so that they can meet their liabilities to policyholders, tends to under-estimate assets and over-estimate liabilities.
In taking this conservative perspective, one of the steps taken is to effectively ignore future profits. On the one hand this makes sense - it's not prudent to anticipate future profits. On the other hand, for an entire portfolio of policies, although some may lapse - statistically we can rely on a number to still be around to contribute to the company's future profits.
Future profits can thus be seen to be an inadmissible asset - an asset which may not (from the regulator's point of view, anyway) be taken into account.
A banker's perspective
If a bank were to give the insurer a loan, the insurer's assets would increase by the amount of the loan, but their liabilities would increase by the same amount too - because they owe that money back to the bank.
With both assets and liabilities increasing by the same amount, the free assets remain unchanged. This is generally a sensible thing, but it's not what financial reinsurance is aiming for.
The reinsurer's perspective
In setting up a financial reinsurance treaty, the reinsurer will provide capital (there are a number of ways of doing this, discussed below). In return, the insurer will pay the capital back over time. The key here is to ensure that repayments only come out of surplus emerging from the reinsured block of business. The benefit of this surplus-limitation comes from the fact that in the regulatory accounts there is no value ascribed to future profits - which means the liability to repay the reinsurer is made from a series of payments which are deemed to be zero.
The impact is that there is an increase in assets (from the financing), but no increase in liabilities. In other words, financial reinsurance increases the company's free assets.
Different accounting regimes
It's important to be clear that financial reinsurance has an impact on the regulatory balance sheet only - which itself already provides a distorted view of a company's solvency. Financial reinsurance, certainly for life insurers, has no impact on their GAAP accounts. It does not disort a company's shareholder-reported profits.
A lot of the bad press around financial reinsurance is because of inappropriate designs and incorrect accounting for the transaction. It is not a problem of financial reinsurance itself.
Types of Reinsurance
Proportional
Proportional reinsurance (mostly known as quota share reinsurance) is where the reinsurer takes a stated percent share of each policy the insurer writes and then shares in the premiums and losses in that same proportion. The size of the insurer might only allow it to write a risk with a policy limit of up to $1 million, but by purchasing proportional reinsurance it might double or triple that limit. Premiums and losses are then shared on a pro rata basis. For example an insurance company might purchase a 50% quota share treaty; in this case they would share half of all premium and losses with the reinsurer. In a 75% quota share, they would share (cede) 3/4th's of all premiums and losses. The reinsurance company usually pays a commission on the premiums back to the insurer in order to compensate them for costs incurred in sourcing and administering (e.g. retail brokerage, taxes, fees, home office expenses) the business (usually 20-30%) This is known as the ceding commission.
The other (lesser known) form of proportional reinsurance is surplus share. In this case, a line is defined as a certain policy limit - say $100,000. In a 9 line surplus share treaty the reinsurer could then accept up to $900,000 (9 lines). So if the Insurance Company issues a policy for $100,000, they would keep all of the premiums and losses from that policy. If they issue a $200,000 policy, they would give (cede) half of the premiums and losses to the reinsurer (1 line each). If they issue a $500,000 policy, they would cede 80% of the premiums and losses on that policy to the reinsurer (1 line to the company, 4 lines to the reinsurer 4/5 = 80%) If they issue the maximum policy limit of $1,000,000 the Reinsurer would then get 90% of all of the premiums and losses from that policy.
Non-proportional (excess of loss)
Non-Proportional reinsurance, also known as excess of loss reinsurance, only responds if the loss suffered by the insurer exceeds a certain amount, called the retention. An example of this form of reinsurance is where the insurer is prepared to accept a loss of $1 million for any loss which may occur and purchases a layer of reinsurance of $4m in excess of $1 million - if a loss of $3 million occurs the insurer pays the $3 million to the insured(s), and then recovers $2 million from their reinsurer(s). In this example, the insurer will retain any loss exceeding $5 million unless they have purchased a further excess layer (second layer) of say $10 million excess of $5 million.
Excess of loss reinsurance can have two forms - Per Risk or Per Occurrence (Catastrophe or Cat). In per risk, the cedants insurance policy limits are greater than the reinsurance retention. For example, an insurance company might insure commercial property risks with policy limits up to $10 million and then buy per risk reinsurance of $5 million in excess of $5 million. In this case a loss of $6 million on that policy will result in the recovery of $1 million from the reinsurer.
In catastrophe excess of loss, the cedants insurance policy limits must be less than the reinsurance retention. For example, an insurance company issues homeowner's policy limits of up to $500,000 and then buys catastrophe reinsurance of $22,000,000 in excess of $3,000,000. In that case, the insurance company would only recover from reinsurers in the event of multiple losses in one event (i.e hurricane, earthquake, etc.)
This same principle applies to casualty reinsurance except that in the case of Catastrophe excess the word Clash is used.
Contracts
Most of the above examples concern reinsurance contracts that cover more than one policy (treaty). Reinsurance can also be purchased on a per policy basis, in which case it is known as facultative reinsurance. Facultative Reinsurance can be written on either a quota share or excess of loss basis. Facultative reinsurance is commonly used for large or unusual risks that do not fit within standard reinsurance treaties due to their exclusions. The term of a facultative agreement coincides with the term of the policy. Facultative reinsurance is usually purchased by the insurance underwriter who underwrote the original insurance policy, whereas treaty reinsurance is typically purchased by a senior executive at the insurance company.
Reinsurance treaties can either be written on a continuous or term basis. A continuous contract continues indefinitely, but generally has a notice period whereby either party can give its intent to cancel or amend the treaty within 90 days. A term agreement has a built-in expiration date. It is common for insurers and reinsurers to have long term relationships that span many years.
Markets
Many reinsurance placements are not placed with a single reinsurer but are shared between a number of reinsurers. (for example a $30,000,000 xs of $20,000,000 layer may be shared by 30 reinsurers with a $1,000,000 participation each) The reinsurer who sets the terms (premium and contract conditions) for the reinsurance contract is called the lead reinsurer; the other companies subscribing to the contract are called following reinsurers (they follow the lead).
About half of all reinsurance is handled by Reinsurance Brokers who then place business with reinsurance companies. The other half is with Direct Writing Reinsurers who have their own production staff and thus reinsure insurance companies directly.
Retrocession
Reinsurance companies themselves also purchase reinsurance and this is known as a retrocession. They purchase this reinsurance from other reinsurance companies, who are then known as retrocessionaires.The reinsurance company that purchases the reinsurance is known as the retrocedent.
It is not unusual for a reinsurer to buy reinsurance protection from other reinsurers. For example, a reinsurer which provides proportional, or pro rata, reinsurance capacity to insurance companies may wish to protect its own exposure to catastrophes by buying excess of loss protection. Another situation would be that a reinsurer which provides excess of loss reinsurance protection may wish to protect itself against an accumulation of losses in different branches of business which may all become affected by the same catastrophe. This may happen when a windstorm causes damage to property, automobiles, boats, aircraft and loss of life.
This process can sometimes continue until the original reinsurance company unknowingly gets some of its own business (and therefore its own liabilities) back. This is known as a spiral and was common in some specialty lines of business such as marine and aviation. Sophisticated reinsurance companies are aware of this danger and through careful underwriting attempt to avoid it.
In the 1980s the London market was badly affected by the intentional creation of reinsurance spirals, which concentrated risks into the hands of a few reinsurance syndicates. A series of catastrophic losses in the late 1980s, bankrupted these syndicates causing many ceding insurance companies to lose their effective coverage.
It is important to note that the insurance company is obliged to indemnify their policyholder for the loss under the insurance policy whether or not the Reinsurer actually reimburses the Insurer. Many insurance companies have gotten into trouble by purchasing reinsurance from reinsurance companies that did not or could not pay their share of the loss.
In a 50% quota share the insurance company could then be left with half the premium and the entire loss. This is a genuine concern when purchasing reinsurance from a reinsurer that is not domiciled in the same country as the insurer. Remember that losses come after the premium, and for certain lines of casualty business (e.g. asbestos or pollution) the losses can come many, many years later.
Proportional reinsurance (mostly known as quota share reinsurance) is where the reinsurer takes a stated percent share of each policy the insurer writes and then shares in the premiums and losses in that same proportion. The size of the insurer might only allow it to write a risk with a policy limit of up to $1 million, but by purchasing proportional reinsurance it might double or triple that limit. Premiums and losses are then shared on a pro rata basis. For example an insurance company might purchase a 50% quota share treaty; in this case they would share half of all premium and losses with the reinsurer. In a 75% quota share, they would share (cede) 3/4th's of all premiums and losses. The reinsurance company usually pays a commission on the premiums back to the insurer in order to compensate them for costs incurred in sourcing and administering (e.g. retail brokerage, taxes, fees, home office expenses) the business (usually 20-30%) This is known as the ceding commission.
The other (lesser known) form of proportional reinsurance is surplus share. In this case, a line is defined as a certain policy limit - say $100,000. In a 9 line surplus share treaty the reinsurer could then accept up to $900,000 (9 lines). So if the Insurance Company issues a policy for $100,000, they would keep all of the premiums and losses from that policy. If they issue a $200,000 policy, they would give (cede) half of the premiums and losses to the reinsurer (1 line each). If they issue a $500,000 policy, they would cede 80% of the premiums and losses on that policy to the reinsurer (1 line to the company, 4 lines to the reinsurer 4/5 = 80%) If they issue the maximum policy limit of $1,000,000 the Reinsurer would then get 90% of all of the premiums and losses from that policy.
Non-proportional (excess of loss)
Non-Proportional reinsurance, also known as excess of loss reinsurance, only responds if the loss suffered by the insurer exceeds a certain amount, called the retention. An example of this form of reinsurance is where the insurer is prepared to accept a loss of $1 million for any loss which may occur and purchases a layer of reinsurance of $4m in excess of $1 million - if a loss of $3 million occurs the insurer pays the $3 million to the insured(s), and then recovers $2 million from their reinsurer(s). In this example, the insurer will retain any loss exceeding $5 million unless they have purchased a further excess layer (second layer) of say $10 million excess of $5 million.
Excess of loss reinsurance can have two forms - Per Risk or Per Occurrence (Catastrophe or Cat). In per risk, the cedants insurance policy limits are greater than the reinsurance retention. For example, an insurance company might insure commercial property risks with policy limits up to $10 million and then buy per risk reinsurance of $5 million in excess of $5 million. In this case a loss of $6 million on that policy will result in the recovery of $1 million from the reinsurer.
In catastrophe excess of loss, the cedants insurance policy limits must be less than the reinsurance retention. For example, an insurance company issues homeowner's policy limits of up to $500,000 and then buys catastrophe reinsurance of $22,000,000 in excess of $3,000,000. In that case, the insurance company would only recover from reinsurers in the event of multiple losses in one event (i.e hurricane, earthquake, etc.)
This same principle applies to casualty reinsurance except that in the case of Catastrophe excess the word Clash is used.
Contracts
Most of the above examples concern reinsurance contracts that cover more than one policy (treaty). Reinsurance can also be purchased on a per policy basis, in which case it is known as facultative reinsurance. Facultative Reinsurance can be written on either a quota share or excess of loss basis. Facultative reinsurance is commonly used for large or unusual risks that do not fit within standard reinsurance treaties due to their exclusions. The term of a facultative agreement coincides with the term of the policy. Facultative reinsurance is usually purchased by the insurance underwriter who underwrote the original insurance policy, whereas treaty reinsurance is typically purchased by a senior executive at the insurance company.
Reinsurance treaties can either be written on a continuous or term basis. A continuous contract continues indefinitely, but generally has a notice period whereby either party can give its intent to cancel or amend the treaty within 90 days. A term agreement has a built-in expiration date. It is common for insurers and reinsurers to have long term relationships that span many years.
Markets
Many reinsurance placements are not placed with a single reinsurer but are shared between a number of reinsurers. (for example a $30,000,000 xs of $20,000,000 layer may be shared by 30 reinsurers with a $1,000,000 participation each) The reinsurer who sets the terms (premium and contract conditions) for the reinsurance contract is called the lead reinsurer; the other companies subscribing to the contract are called following reinsurers (they follow the lead).
About half of all reinsurance is handled by Reinsurance Brokers who then place business with reinsurance companies. The other half is with Direct Writing Reinsurers who have their own production staff and thus reinsure insurance companies directly.
Retrocession
Reinsurance companies themselves also purchase reinsurance and this is known as a retrocession. They purchase this reinsurance from other reinsurance companies, who are then known as retrocessionaires.The reinsurance company that purchases the reinsurance is known as the retrocedent.
It is not unusual for a reinsurer to buy reinsurance protection from other reinsurers. For example, a reinsurer which provides proportional, or pro rata, reinsurance capacity to insurance companies may wish to protect its own exposure to catastrophes by buying excess of loss protection. Another situation would be that a reinsurer which provides excess of loss reinsurance protection may wish to protect itself against an accumulation of losses in different branches of business which may all become affected by the same catastrophe. This may happen when a windstorm causes damage to property, automobiles, boats, aircraft and loss of life.
This process can sometimes continue until the original reinsurance company unknowingly gets some of its own business (and therefore its own liabilities) back. This is known as a spiral and was common in some specialty lines of business such as marine and aviation. Sophisticated reinsurance companies are aware of this danger and through careful underwriting attempt to avoid it.
In the 1980s the London market was badly affected by the intentional creation of reinsurance spirals, which concentrated risks into the hands of a few reinsurance syndicates. A series of catastrophic losses in the late 1980s, bankrupted these syndicates causing many ceding insurance companies to lose their effective coverage.
It is important to note that the insurance company is obliged to indemnify their policyholder for the loss under the insurance policy whether or not the Reinsurer actually reimburses the Insurer. Many insurance companies have gotten into trouble by purchasing reinsurance from reinsurance companies that did not or could not pay their share of the loss.
In a 50% quota share the insurance company could then be left with half the premium and the entire loss. This is a genuine concern when purchasing reinsurance from a reinsurer that is not domiciled in the same country as the insurer. Remember that losses come after the premium, and for certain lines of casualty business (e.g. asbestos or pollution) the losses can come many, many years later.
Functions of Reinsurance
Protecting against catastrophic events is only one kind of reinsurance. There are many reasons an insurance company will choose to reinsure as part of its responsibility to manage a portfolio of risks for the benefit of its policyholders and investors.
Risk transfer
The main uses of reinsurance are to allow the ceding company to assume individual risks greater than its size would otherwise allow, and to protect the cedant against catastrophic losses. Reinsurance allows an insurance company to offer larger limits of protection to a policyholder than its own capital would allow. If an insurance company can safely write only $5 million in limits on any one policy, it can reinsure (or cede) the amount of the limits in excess of $5 million to reinsurers.
Reinsurances highly refined uses in recent years include applications where reinsurance was used as part of a carefully planned hedge strategy.
Income smoothing
Reinsurance can help to make an insurance companies results more predictable by absorbing larger losses and reducing the amount of capital needed to provide coverage.
Surplus relief
Reinsurance can improve an insurance company's balance sheet by reducing the amount of net liability, and thereby increasing surplus. Surplus, assets less liabilities, is roughly the same as shareholder equity on a balance sheet of a non-insurance company.
Arbitrage
The insurance company may be motivated by arbitrage in purchasing reinsurance coverage at a lower rate than what they believe the cost is for the underlying risk.
Risk transfer
The main uses of reinsurance are to allow the ceding company to assume individual risks greater than its size would otherwise allow, and to protect the cedant against catastrophic losses. Reinsurance allows an insurance company to offer larger limits of protection to a policyholder than its own capital would allow. If an insurance company can safely write only $5 million in limits on any one policy, it can reinsure (or cede) the amount of the limits in excess of $5 million to reinsurers.
Reinsurances highly refined uses in recent years include applications where reinsurance was used as part of a carefully planned hedge strategy.
Income smoothing
Reinsurance can help to make an insurance companies results more predictable by absorbing larger losses and reducing the amount of capital needed to provide coverage.
Surplus relief
Reinsurance can improve an insurance company's balance sheet by reducing the amount of net liability, and thereby increasing surplus. Surplus, assets less liabilities, is roughly the same as shareholder equity on a balance sheet of a non-insurance company.
Arbitrage
The insurance company may be motivated by arbitrage in purchasing reinsurance coverage at a lower rate than what they believe the cost is for the underlying risk.
Who benefits from reinsurance?
Reinsurance is about the consumer and the insurance company both. Everyone benefits from reinsurance in a big way.
Reinsurance for the insurance company
Reinsurance is the only thing that allows insurance companies to take such big risks. It is this reinsurance that allows them to insure as much as they often do. Without the reinsurance they will not be able to.
You see an insurance company never knows when they will have to pay out and to how many people in any given year. They are actually insuring more than they would be able to afford to pay out all at once, that is where reinsurance comes into the picture. By reinsuring the amounts they will be able to pass some of the risk to other insurance companies thus giving the consumer a larger benefit package. For the consumer this means higher insurance policies and larger payouts.
The transferring of risk
By transferring the risk the insurance company will be less likely to go bankrupt and close. They will be bale to continue to do business and they will not have to worry about the losses that they incur each year because everything will flow smoothly with the help of this reinsurance. The company will not have to have so much capital at all times, giving them much more leeway in their business.
Most insurance companies are able to get this reinsurance at much lower rates that you or I could get insurance. The benefits of reinsurance do not just end with the company being able to write bigger policies for the insured but it also lowers their liability which is something that all insurance companies want.
How reinsurance is written
Reinsurance contracts can be write to cover single insurance policies or they can cover many more than just one. Most insurance companies have reinsurance policies that cover much of the business that they do. They will have to get these individual reinsurance policies in some cases when an insurance policy poses a more serious risk.
Reinsuring the reinsurer
Even reinsurance companies buy reinsurance. It is a continuous cycle of insuring the insured, it may sound confusing but it is all about protecting everyones interests. This is why you can get the insurance that you need to keep you and your family safe and secure.
Reinsurance for the insurance company
Reinsurance is the only thing that allows insurance companies to take such big risks. It is this reinsurance that allows them to insure as much as they often do. Without the reinsurance they will not be able to.
You see an insurance company never knows when they will have to pay out and to how many people in any given year. They are actually insuring more than they would be able to afford to pay out all at once, that is where reinsurance comes into the picture. By reinsuring the amounts they will be able to pass some of the risk to other insurance companies thus giving the consumer a larger benefit package. For the consumer this means higher insurance policies and larger payouts.
The transferring of risk
By transferring the risk the insurance company will be less likely to go bankrupt and close. They will be bale to continue to do business and they will not have to worry about the losses that they incur each year because everything will flow smoothly with the help of this reinsurance. The company will not have to have so much capital at all times, giving them much more leeway in their business.
Most insurance companies are able to get this reinsurance at much lower rates that you or I could get insurance. The benefits of reinsurance do not just end with the company being able to write bigger policies for the insured but it also lowers their liability which is something that all insurance companies want.
How reinsurance is written
Reinsurance contracts can be write to cover single insurance policies or they can cover many more than just one. Most insurance companies have reinsurance policies that cover much of the business that they do. They will have to get these individual reinsurance policies in some cases when an insurance policy poses a more serious risk.
Reinsuring the reinsurer
Even reinsurance companies buy reinsurance. It is a continuous cycle of insuring the insured, it may sound confusing but it is all about protecting everyones interests. This is why you can get the insurance that you need to keep you and your family safe and secure.
Reinsurance
This is more a section for agents and for folks who are learning about insurance. We start out by asking a few questions...
Insurance Claims Portal
This section is dedicated for helping consumers and claims specialists to understand Insurance claims and related topics. We have also aggregated many useful resources to help you with the claims process. For country specific claims resources please visit the country portals. Since this is the main page for this portal we have created links to specific pages within our site which will help you understand each topic further.
What is an Insurance claim? This gives a detailed view of what is an insurance claim and a bit about the adjustors and pros and cons of claims.
How to File an Insurance claim - This section provides a comprehensive idea on how to file any type of Insurance claims.
Dealing with the Insurance Adjustors - this section deals with what you need to know to deal with the adjustors sent by your Insurance company.
What is an Insurance claim? This gives a detailed view of what is an insurance claim and a bit about the adjustors and pros and cons of claims.
How to File an Insurance claim - This section provides a comprehensive idea on how to file any type of Insurance claims.
Dealing with the Insurance Adjustors - this section deals with what you need to know to deal with the adjustors sent by your Insurance company.
Marine Insurance
It can be defined as under: “Marine insurance business means the business of effecting contracts of insurance upon vessels of any description, including cargoes, freights and other interests which may be legally insured in or relation to such vessels, cargoes and freights, gods, wares merchandise and property of whatsoever description insured for any transit by land or water or air or all the three. The same may include warehouse risks or similar risks in addition or as incidental to such transit and includes any other risks which are customarily included among the risks insured against in marine insurance policies”.
There are two distinct branches of marine insurance:
1. Hull – i.e. Insurance of ships
2. Cargo – i.e. Insurance of goods in transit.
#MARINE HULL INSURANCE
#MARINE CARGO INSURANCE
#INLAND TRANSIT BY RAIL / ROAD
#TRANSIT RISKS/PERILS TO BE RETAINED BY INSURED
#PRINCIPLE OF INDEMNITY IN MARINE INSURANCE
#METHOD OF INDEMNIFICATION
#PRINCIPLE OF SUBROGATION AND CONTRIBUTION
I Marine Hull Insurance:
This pertains to insurance of ocean going steamers and other vessels. “Hull” refers to the body or frame of the ship. Hull insurance provides the cover for the hull and machinery as well as in respect of materials and outfit and stores and provisions for the officers and crew. In addition cover for liabilities is included. Hull policy consists of basic policy attached to INSTITUTE CLAUSES which are drafted by the Institute of London Underwriters, an association representing the marine insurance companies and Lloyd’s underwriters operating in London.
I (1) The Institute Time Clause (Hull) Cover embraces:
• The coverage of maritime perils namely fire, collision, stranding etc.
• The coverage of additional perils such as latent defect in machinery, accidents in loading / discharging cargo.
• The Running Down Clause embodied in the hull insurance provide cover for damage caused to another ship in collision as a consequence of negligent navigation.
• May also cover vessels in course of construction, which are taken by the ship builders. Coverage starts from keel laying and until delivery of the ship to the owners.
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II Marine Cargo Insurance:
This being cargo insurance, it provides cover for various transit perils in respect of goods and or merchandise in transit from one place to another by sea, air, road or registered post. Transit or Marine risks or perils are covered under Marine Insurance. Marine insurance plays a pivotal role in Import, Export and internal trade. Trade involves movement of goods from one place to another place. Goods while in transit are liable to be lost or damaged through one or other of various perils from the time it leaves the warehouse of the supplier till it is received at the final warehouse of the consignee. Goods while in transit are generally exposed to any one of the following perils leading to total loss or damage. The loss or damage suffered due to these perils is to be transferred to the Insurer in lieu of the premium, as these are included in the Marine cover.
II (1) SHIPMENTS BY SEA
The imports or exports as well as coastal shipments are governed by three separate clauses. Viz. Institute Cargo Clauses (ICC) namely, ICC -A, ICC –B and ICC –C attached to the policy. The risks / perils covered under the various clauses are:
• ICC - C: Fire, Explosion, Straining, Sinking, Derailment of land conveyance, Collision, Discharge of cargo at Port of Distress, Jettison, Grounding or capsizing, General Average, Sacrifice, General and Salvage Charges.
• ICC – B: All risks covered under ICC –C plus Earthquake, Lightning, Washing, Overboard Damage due to sea, Lake, River Water, Total loss of package while loading or unloading.
• ICC – A: All risks / perils or damage plus Malicious Damage & Piracy except those which are separately excluded.
II (2) AIR TRANSIT
Airfreight consignments are covered under three sets of clauses. The risks / perils covered are ALL risks or damages to the Cargo insured subject to specific exclusions.
• Institute Cargo Clauses (Air) excluding sending by post.
• Institute War Clauses (Air Cargo) excluding sending by post.
• Institute Strike Clauses. (Air Cargo)
II (3) REGISTERED POSTAL through AIR
• These are insured as per Institute Cargo Clauses A (ICC – A). Hence the risks covered shall remain same as applicable under ICC – A.
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III. INLAND TRANSIT BY RAIL / ROAD:
There are two types of covers namely Rail / Road Clause B and Clause C are normally given by the Insurers for the goods transportation by Rail /Road.
III (1) CLAUSE B COVER include physical loss or damage suffered due
to such risks / perils as
• Shortage due to tearing and bursting of bags / cans, over turning, derailment.
• Short delivery / Non-delivery, Leakage/Breakage
• Theft/Pilferage, Contamination.
• Denting/Bending/Chipping, Rusting.
• Rain water damage / Fresh water damage.
• Damage by extraneous substances.
• Breakage of bridges/Culverts.
• Damage due to jerks and jolts during transit , Collision with or by carrying vehicle.
• Damage while handling at Port of Entry or at Exit Port.
• Damage while handling during loading / unloading at warehouses / intermediate stores / trans-shipment and at site etc.
• Loss while unloading process at site due to failure of crane, slings or negligence of labour etc.
III (2) CLAUSE C COVER: This cover includes physical loss or damage suffered due to risks / perils such as
• Loss or damage due to Fire risk.
• Loss or damage due to Lightning.
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IV TRANSIT RISKS/PERILS TO BE RETAINED BY INSURED
Following are some of the perils which are to be retained by the Insured as these risks / perils are excluded in the marine cover. Additional covers against certain risks / perils such as Strikes, Riots, civil commotion, Terrorism or person acting from political motive etc may be covered on payment of extra premium. War risk on Rail / Road transport is not granted.
IV (1) IMPORTS / EXPORTS AND COASTAL SHIPMENTS BY SEA , AIR & CONSIGNMENTS ARE SENT BY REGISTERED POST
These are common to all the three separate clauses namely ICC –C, ICC-B and ICC-A except that the risks of Piracy and Malicious Damage are covered in ICC – A, but not in ICC – B and ICC – C.
• Loss damage or expense attributable to willful misconduct of the Insured.
• Ordinary leakage, Ordinary loss in weight or volume, Ordinary wear and tear of the subject matter insured, Loss damage or expense caused by inherent vice or nature of the subject matter insured
• Loss damage or expense caused by insufficient or unsuitable packing of the subject matter insured.
• Loss damage or expense proximately caused by delay, even though the delay caused by a risk insured against.
• Loss damage or expense arising from insolvency / financial defaults of the owners Managers / Charters / Operators of the vessel.
• Loss damage or expenses arising from the use of any weapon of war employing atomic or nuclear fission / fusion / other like reaction or radioactive force or matter.
• Loss damage or expenses arising from un-seaworthiness/ unfitness of vessel or craft / conveyance container or lift-van for the safe carriage of the subject matter insured, where the Insured or their Agents are privy to such un-seaworthiness.
• Loss damage or expense caused by war, civil war revolution, rebellion, insurrection or civil strike arising there-from or any hostile act by or against belligerent power.
• Loss damage or expense caused by capture, seizure, arrest, restraint or detainment (except piracy) and the consequences thereof or any attempt of threat.
• Loss damage or expense caused by derelict mines, torpedoes, bombs or other derelict weapons of war.
• Loss damage or expense caused by strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil commotion.
• Loss damage or expense caused by any terrorist or any person acting a political motive.
• Loss or damage due to Piracy (Included in ICC – A only.)
• Loss or expenses caused due to Malicious Damage. (Included in ICC – A only.)
IV (2) INLAND TRANSIT BY RAIL / ROAD: The following are the additional risks / perils to be retained by the Insured are common to the Rail / Road Clauses B and C (over & above the said earlier in IV (1).
• Loss damage or expense caused by war, civil war revolution, rebellion, insurrection or civil strike arising there-from or any hostile act by or against belligerent power.
• Loss damage or expense caused by derelict mines, torpedoes, bombs or other derelict weapons of war.
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V. PRINCIPLE OF INDEMNITY IN MARINE INSURANCE
Both Marine Cargo & Marine Hull policies are issued as ‘Valued’ Policies. A valued policy is one which specifies the agreed value of the subject matter insured value. This value is the insured value. Goods which are covered under marine policies will be in the course of transit from one county to another the price of which are subject to fluctuations from time to time. The value will be the maximum at the time when the cargo reaches the destination. It is difficult to arrive at the value when the goods are in transit. Therefore agreed value policies are issued on cargoes. The agreed value includes purchase cost, freight, internal & inland transport, expenses on loading & unloading, cost of insurance, port trust charges, local agency commission, Taxes & duties. Marine hull insurance policies are also issued as valued policies. The market value of ship also fluctuates widely. The market value of a ship may not reflect its true value to the owner. A vessel may be3 old but to a ship owner it is as valuable as a new vessel from the point of freight earning capacity. The sum insured is fixed be agreement between the insurer and the insured which is arrived as a fair value.
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VI METHOD OF INDEMNIFICATION:
There are four methods of providing the indemnity to the ` insured viz.
• Settlement by Cash payment
• By Repairing of the damaged goods ( based on the detailed submitted by the insured )
• Replacement of the property. This is rarely met with.
• Reinstatement.. The responsibility rests with the insurers and as such and because of obvious reasons this is not implemented.
The company may at its option reinstate or replace the property damaged or destroyed or part thereof instead of paying the amount of the loss or damage.
Reinstatement of the sum insured after a loss is paid does not arise. The sum insured under a hull policy is the maximum limit of the liability not for the period of insurance but for any one casualty. There may number of repair claims under a hull policy and when these are paid the sum insured does not get reduced and the question of restoration of the sum insured does not arise. Unless the policy otherwise provides the insurer is liable for successive losses even though the total amount of such losses may exceed the Sum Insured.
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VII. PRINCIPLE OF SUBROGATION AND CONTIBUTIION:
In the marine policy the insurer must have paid the claim before they are entitled to rights of subrogation. Whether the loss paid is total or partial insurers subrogated to all the rights and remedies of the insured. Such rights and remedies include right of recovery from third parties. In the event of loss of goods at the destination, the sum insured which is the agreed value will be paid. In case the goods are damaged during transit, the amount payable is arrived as a proportion of the sum insured according to the % of depreciation, suffered by the goods as certified by surveyors.
The understanding the difference between abandonment and subrogation is necessary. Where the ship is so damaged that, if the insured considers it not worth while to repair it because the cost of repairs would exceed the value of the ship after repair, he abandons the ship to the insurers and claims the sum insured on the basis of ‘Constructive Loss’. If the insurers accept the abandoned ship, they acquire proprietary rights in the ship. If it is possible to sell the damaged ship, with or without repairs, for more than the insured value the insurers can make and retain the profit. But under subrogation they can retain only up to the amount they have indemnified the insured.
It is the duty of the assured and their servants / agents to take such measure as may be reasonable for the purpose of averting o minimizing a loss and ensure that all rights against carriers, bailees or other third parties are propoe5ly preserved and exercised.
Contribution may be defined as the right of an insurer who has paid a loss under a policy to recover a proportionate amount from other insurers who are liable for the loss. An insured may effect two or more insurances n the same subject-matter of insurance. If in the event of a loss he recovers under each and every policy the amount recovered would be more than his actual loss. This would result in a profit to him and thereby the fundamental principle of indemnity will be infringed. The principle of contribution therefore supports the principe of indemnity. ,
There are two distinct branches of marine insurance:
1. Hull – i.e. Insurance of ships
2. Cargo – i.e. Insurance of goods in transit.
#MARINE HULL INSURANCE
#MARINE CARGO INSURANCE
#INLAND TRANSIT BY RAIL / ROAD
#TRANSIT RISKS/PERILS TO BE RETAINED BY INSURED
#PRINCIPLE OF INDEMNITY IN MARINE INSURANCE
#METHOD OF INDEMNIFICATION
#PRINCIPLE OF SUBROGATION AND CONTRIBUTION
I Marine Hull Insurance:
This pertains to insurance of ocean going steamers and other vessels. “Hull” refers to the body or frame of the ship. Hull insurance provides the cover for the hull and machinery as well as in respect of materials and outfit and stores and provisions for the officers and crew. In addition cover for liabilities is included. Hull policy consists of basic policy attached to INSTITUTE CLAUSES which are drafted by the Institute of London Underwriters, an association representing the marine insurance companies and Lloyd’s underwriters operating in London.
I (1) The Institute Time Clause (Hull) Cover embraces:
• The coverage of maritime perils namely fire, collision, stranding etc.
• The coverage of additional perils such as latent defect in machinery, accidents in loading / discharging cargo.
• The Running Down Clause embodied in the hull insurance provide cover for damage caused to another ship in collision as a consequence of negligent navigation.
• May also cover vessels in course of construction, which are taken by the ship builders. Coverage starts from keel laying and until delivery of the ship to the owners.
# top
II Marine Cargo Insurance:
This being cargo insurance, it provides cover for various transit perils in respect of goods and or merchandise in transit from one place to another by sea, air, road or registered post. Transit or Marine risks or perils are covered under Marine Insurance. Marine insurance plays a pivotal role in Import, Export and internal trade. Trade involves movement of goods from one place to another place. Goods while in transit are liable to be lost or damaged through one or other of various perils from the time it leaves the warehouse of the supplier till it is received at the final warehouse of the consignee. Goods while in transit are generally exposed to any one of the following perils leading to total loss or damage. The loss or damage suffered due to these perils is to be transferred to the Insurer in lieu of the premium, as these are included in the Marine cover.
II (1) SHIPMENTS BY SEA
The imports or exports as well as coastal shipments are governed by three separate clauses. Viz. Institute Cargo Clauses (ICC) namely, ICC -A, ICC –B and ICC –C attached to the policy. The risks / perils covered under the various clauses are:
• ICC - C: Fire, Explosion, Straining, Sinking, Derailment of land conveyance, Collision, Discharge of cargo at Port of Distress, Jettison, Grounding or capsizing, General Average, Sacrifice, General and Salvage Charges.
• ICC – B: All risks covered under ICC –C plus Earthquake, Lightning, Washing, Overboard Damage due to sea, Lake, River Water, Total loss of package while loading or unloading.
• ICC – A: All risks / perils or damage plus Malicious Damage & Piracy except those which are separately excluded.
II (2) AIR TRANSIT
Airfreight consignments are covered under three sets of clauses. The risks / perils covered are ALL risks or damages to the Cargo insured subject to specific exclusions.
• Institute Cargo Clauses (Air) excluding sending by post.
• Institute War Clauses (Air Cargo) excluding sending by post.
• Institute Strike Clauses. (Air Cargo)
II (3) REGISTERED POSTAL through AIR
• These are insured as per Institute Cargo Clauses A (ICC – A). Hence the risks covered shall remain same as applicable under ICC – A.
# top
III. INLAND TRANSIT BY RAIL / ROAD:
There are two types of covers namely Rail / Road Clause B and Clause C are normally given by the Insurers for the goods transportation by Rail /Road.
III (1) CLAUSE B COVER include physical loss or damage suffered due
to such risks / perils as
• Shortage due to tearing and bursting of bags / cans, over turning, derailment.
• Short delivery / Non-delivery, Leakage/Breakage
• Theft/Pilferage, Contamination.
• Denting/Bending/Chipping, Rusting.
• Rain water damage / Fresh water damage.
• Damage by extraneous substances.
• Breakage of bridges/Culverts.
• Damage due to jerks and jolts during transit , Collision with or by carrying vehicle.
• Damage while handling at Port of Entry or at Exit Port.
• Damage while handling during loading / unloading at warehouses / intermediate stores / trans-shipment and at site etc.
• Loss while unloading process at site due to failure of crane, slings or negligence of labour etc.
III (2) CLAUSE C COVER: This cover includes physical loss or damage suffered due to risks / perils such as
• Loss or damage due to Fire risk.
• Loss or damage due to Lightning.
# top
IV TRANSIT RISKS/PERILS TO BE RETAINED BY INSURED
Following are some of the perils which are to be retained by the Insured as these risks / perils are excluded in the marine cover. Additional covers against certain risks / perils such as Strikes, Riots, civil commotion, Terrorism or person acting from political motive etc may be covered on payment of extra premium. War risk on Rail / Road transport is not granted.
IV (1) IMPORTS / EXPORTS AND COASTAL SHIPMENTS BY SEA , AIR & CONSIGNMENTS ARE SENT BY REGISTERED POST
These are common to all the three separate clauses namely ICC –C, ICC-B and ICC-A except that the risks of Piracy and Malicious Damage are covered in ICC – A, but not in ICC – B and ICC – C.
• Loss damage or expense attributable to willful misconduct of the Insured.
• Ordinary leakage, Ordinary loss in weight or volume, Ordinary wear and tear of the subject matter insured, Loss damage or expense caused by inherent vice or nature of the subject matter insured
• Loss damage or expense caused by insufficient or unsuitable packing of the subject matter insured.
• Loss damage or expense proximately caused by delay, even though the delay caused by a risk insured against.
• Loss damage or expense arising from insolvency / financial defaults of the owners Managers / Charters / Operators of the vessel.
• Loss damage or expenses arising from the use of any weapon of war employing atomic or nuclear fission / fusion / other like reaction or radioactive force or matter.
• Loss damage or expenses arising from un-seaworthiness/ unfitness of vessel or craft / conveyance container or lift-van for the safe carriage of the subject matter insured, where the Insured or their Agents are privy to such un-seaworthiness.
• Loss damage or expense caused by war, civil war revolution, rebellion, insurrection or civil strike arising there-from or any hostile act by or against belligerent power.
• Loss damage or expense caused by capture, seizure, arrest, restraint or detainment (except piracy) and the consequences thereof or any attempt of threat.
• Loss damage or expense caused by derelict mines, torpedoes, bombs or other derelict weapons of war.
• Loss damage or expense caused by strikers, locked-out workmen, or persons taking part in labour disturbances, riots or civil commotion.
• Loss damage or expense caused by any terrorist or any person acting a political motive.
• Loss or damage due to Piracy (Included in ICC – A only.)
• Loss or expenses caused due to Malicious Damage. (Included in ICC – A only.)
IV (2) INLAND TRANSIT BY RAIL / ROAD: The following are the additional risks / perils to be retained by the Insured are common to the Rail / Road Clauses B and C (over & above the said earlier in IV (1).
• Loss damage or expense caused by war, civil war revolution, rebellion, insurrection or civil strike arising there-from or any hostile act by or against belligerent power.
• Loss damage or expense caused by derelict mines, torpedoes, bombs or other derelict weapons of war.
# top
V. PRINCIPLE OF INDEMNITY IN MARINE INSURANCE
Both Marine Cargo & Marine Hull policies are issued as ‘Valued’ Policies. A valued policy is one which specifies the agreed value of the subject matter insured value. This value is the insured value. Goods which are covered under marine policies will be in the course of transit from one county to another the price of which are subject to fluctuations from time to time. The value will be the maximum at the time when the cargo reaches the destination. It is difficult to arrive at the value when the goods are in transit. Therefore agreed value policies are issued on cargoes. The agreed value includes purchase cost, freight, internal & inland transport, expenses on loading & unloading, cost of insurance, port trust charges, local agency commission, Taxes & duties. Marine hull insurance policies are also issued as valued policies. The market value of ship also fluctuates widely. The market value of a ship may not reflect its true value to the owner. A vessel may be3 old but to a ship owner it is as valuable as a new vessel from the point of freight earning capacity. The sum insured is fixed be agreement between the insurer and the insured which is arrived as a fair value.
# top
VI METHOD OF INDEMNIFICATION:
There are four methods of providing the indemnity to the ` insured viz.
• Settlement by Cash payment
• By Repairing of the damaged goods ( based on the detailed submitted by the insured )
• Replacement of the property. This is rarely met with.
• Reinstatement.. The responsibility rests with the insurers and as such and because of obvious reasons this is not implemented.
The company may at its option reinstate or replace the property damaged or destroyed or part thereof instead of paying the amount of the loss or damage.
Reinstatement of the sum insured after a loss is paid does not arise. The sum insured under a hull policy is the maximum limit of the liability not for the period of insurance but for any one casualty. There may number of repair claims under a hull policy and when these are paid the sum insured does not get reduced and the question of restoration of the sum insured does not arise. Unless the policy otherwise provides the insurer is liable for successive losses even though the total amount of such losses may exceed the Sum Insured.
# top
VII. PRINCIPLE OF SUBROGATION AND CONTIBUTIION:
In the marine policy the insurer must have paid the claim before they are entitled to rights of subrogation. Whether the loss paid is total or partial insurers subrogated to all the rights and remedies of the insured. Such rights and remedies include right of recovery from third parties. In the event of loss of goods at the destination, the sum insured which is the agreed value will be paid. In case the goods are damaged during transit, the amount payable is arrived as a proportion of the sum insured according to the % of depreciation, suffered by the goods as certified by surveyors.
The understanding the difference between abandonment and subrogation is necessary. Where the ship is so damaged that, if the insured considers it not worth while to repair it because the cost of repairs would exceed the value of the ship after repair, he abandons the ship to the insurers and claims the sum insured on the basis of ‘Constructive Loss’. If the insurers accept the abandoned ship, they acquire proprietary rights in the ship. If it is possible to sell the damaged ship, with or without repairs, for more than the insured value the insurers can make and retain the profit. But under subrogation they can retain only up to the amount they have indemnified the insured.
It is the duty of the assured and their servants / agents to take such measure as may be reasonable for the purpose of averting o minimizing a loss and ensure that all rights against carriers, bailees or other third parties are propoe5ly preserved and exercised.
Contribution may be defined as the right of an insurer who has paid a loss under a policy to recover a proportionate amount from other insurers who are liable for the loss. An insured may effect two or more insurances n the same subject-matter of insurance. If in the event of a loss he recovers under each and every policy the amount recovered would be more than his actual loss. This would result in a profit to him and thereby the fundamental principle of indemnity will be infringed. The principle of contribution therefore supports the principe of indemnity. ,
Renter's Insurance
Renter’s Insurance is an adjustment of a homeowner’s insurance policy that covers rented properties. It consists of two main components: liability coverage and personal property coverage. It is not expensive – the average renter can get complete coverage for a couple of hundred dollars or less a year. It is going to protect you from any losses due to theft, or if there is a fire in your building. It is a must for almost all who live in apartments. Once you determine your need for renter’s insurance, knowing your options will help you choose the best policy. Make sure you have the protection by taking renter’s insurance to avoid financial setbacks.
Click here for additional resources on renters insurance
Questions to ask while purchasing or studying about Renter's Insurance
Many tenants are unaware that rental policies by the owner of the property do not protect them or their personal belongings against such calamities. Protect yourself by getting renter’s insurance. In the absent of renter's insurance, tenants who lose their personal belongings in earthquakes, wildfires, hurricanes or floods also are not protected. Check with your agent on specific coverage’s as it can vary between companies and states.
It you don’t have cash on hand or the ready credit, it’s the right time for you to buy renter’s insurance. Conduct an inventory of your belongings and work with your agent to come up with an appropriate amount. Be sure you are working with a right agent. Go through each policy and checkout for what the coverage includes with any exceptions.
Does my landlord insurance cover me?
No. Because the landlord carries the insurance that will cover his loss in a situation where the building is destroyed or damaged by fire.
Is it easy to get renters insurance?
Yes, you can head for the yellow pages, check with various insurance companies who offer renter’s insurance, shop around for the best rates. If you are already having auto insurance, taking renter’s insurance through the same company will cost you less.
Landlords need to return security deposit
Security deposits are returnable to the tenant upon the termination of the lease. According to the terms of the lease agreement, the landlord may deduct certain sums from the security deposit. If he fails to return the security deposit before the applicable date, the tenant has the right to take legal action against the landlord. It is always advisable to make lease agreement in writing regarding the security deposits because it acts as evidence in the court of law and can win in your favor.
Valuing your items in the inventory list
You need to check with your agent to verify the claim payment on your policy, as most of the insurance policies; claims only the basis of the replacement costs. Mention the price of the item as of today.
Price and Coverage of the policy
More the coverage you purchase, the higher the price of the policy. Because the policy is not done individually for each piece of the property, instead a fixed amount will be determined.
Roommates sharing a single renter’s insurance
Insurance becomes complicated when unrelated people share a residence. Some insurance companies do not allow roommates to be listed on a single renter’s insurance policy
Flood Insurance - Information and Resources
Flood insurance provides compensation for physical property damages due to flooding. To be a little precise it provides insurance for damage caused due to overflowing water bodies. in most countries there is the concept of flood hazard zones and in most developed countries there is a mandatory requirement to get Flood Insurance for property in the flood hazard zones. In USA the home owner insurance policies typically exclude flood coverage and require separate purchase of this policy. This is both good and bad as it reduces the cost for folks who are in zones which has a very low probability for flooding. One of the interesting myth floating around is rain coupled with high winds that seep into property or through open windows is considered for flood insurance program. It is not and irrespective of where you live it is just common sense to protect your property from rain water.
#Helpful TIPS
#Things to consider
#Types of Flood Insurance Coverage available
#First Steps after your property got flooded
#Tips to cleanup after flooding
Helpful tips about flood preparation
Shut off electricity, unplug all electrical applicances and keep in a safe place high above.
Silicone Sealant or sand bagging really reduces or prevents water entering your home.
The idea is to reduce as much damage so keeping internal doors and furniture in safe place is one of the best things to do.
There are a few items in your home that carry high sentimental value which is very important to secure as they help you to rebuild after floods without much pain. Trust me on this.
Flood insurance is required on all properties located in Special Flood Hazard Zones. If you do not live in a Special Flood Hazard Area, you are not required to purchase flood insurance when you buy your home. Flood insurance compensates against loss by flood damage. Although flood insurance is inexpensive, most people neglect to purchase it. The insurance covers damage to a building; including the foundation, pilings or other support systems for elevated buildings. It is a necessity for those who live in flood prone areas, especially those who live in high hazard flood areas. The only guaranteed flood insurance coverage available for your home is Federal Flood Insurance purchased through your insurance agent or company. Flood insurance is not available to residents of communities that do not participate in the National Flood Insurance Program. The coverage is available separately from your homeowner’s policy through a program developed by private industry and the federal government. The federal government determines whether an area is prone to flooding and considered to be in a flood plain. Flood certifications will indicate whether the property lies within an area so designated.
Things to consider
Contact your insurance agent to purchase the flood insurance and to learn more about your eligibility.
There is a standard 30-day waiting period for new applications and endorsements for coverage.
You will not be insured if purchase a policy few days before the flood.
25% of all flood loss claims are filed in areas of low to moderate risk.
Buy a policy with guaranteed replacement-cost coverage, or get you home appraised every few years to make sure you have enough insurance.
When comparing insurers, one question to ask is how quickly are your claims resolved?
Types of Flood Insurance Coverage available
Policies are available in three forms: General Property, Dwelling and Condominiums
All policies have deductibles for both building and contents coverage, incase you purchase contents coverage.
Exclusions
Walkways, driveways, patios, Contents in basements are not covered with a few exceptions such as dryer, freezer and washer.
First Steps after your property got flooded:
Call your insurance company's (24 hour) Emergency Helpline as soon as possible. They will be able to provide information on dealing with your claim, and assistance in getting things back to normal. Keep a record of the flood damage (especially photographs or video footage) and retain correspondence with insurers after the flood. Commission immediate emergency pumping/repair work if necessary to protect your property from further damage. This can be undertaken without insurer approval (remember to get receipts). Get advice where detailed, lengthy repairs are needed. Your insurer or loss adjuster can give advice on reputable contractors / tradesmen. Beware of bogus tradesmen and always check references. Check with your insurer if you have to move into alternative accommodation as the cost is normally covered under a household policy. Make sure your insurance company knows where to contact you if you have to move out of your home.
Tips to cleanup after flooding:
Find out where you can get help to clean up. Check with your local authority or health authority in the first instance or look under 'Flood Damage' in Yellow Pages for suppliers of cleaning materials or equipment to dry out your property. It takes a house brick about one month per inch to dry out. Open doors and windows to ventilate the house, but take care to ensure your house and valuables are secure.
Contact your gas, electricity and water company. Have your power supplies checked before you turn them back on to make sure they have dried out. Wash taps and run them for a few minutes before use. Don’t attempt to dry out photos or papers - place them in a plastic bag, and if possible store them in the fridge. Throw away food which may have been in contact with floodwater - it could be contaminated. Contact your local authority Environmental Health department for advice. The Citizens Advice Bureau and other organisations may be able to help if you feel under pressure, their numbers can be found in the phone book. Don’t think it can’t happen again. Restock your supplies.
Click here for more Flood Insurance related resources from our resources section. Contains many guides and information collected from many government agencies.
Learn more about the national flood insurance program if you are in united states. click here.
If you are living near a river you got to read this section on Living near a river - flood insurance.
#Helpful TIPS
#Things to consider
#Types of Flood Insurance Coverage available
#First Steps after your property got flooded
#Tips to cleanup after flooding
Helpful tips about flood preparation
Shut off electricity, unplug all electrical applicances and keep in a safe place high above.
Silicone Sealant or sand bagging really reduces or prevents water entering your home.
The idea is to reduce as much damage so keeping internal doors and furniture in safe place is one of the best things to do.
There are a few items in your home that carry high sentimental value which is very important to secure as they help you to rebuild after floods without much pain. Trust me on this.
Flood insurance is required on all properties located in Special Flood Hazard Zones. If you do not live in a Special Flood Hazard Area, you are not required to purchase flood insurance when you buy your home. Flood insurance compensates against loss by flood damage. Although flood insurance is inexpensive, most people neglect to purchase it. The insurance covers damage to a building; including the foundation, pilings or other support systems for elevated buildings. It is a necessity for those who live in flood prone areas, especially those who live in high hazard flood areas. The only guaranteed flood insurance coverage available for your home is Federal Flood Insurance purchased through your insurance agent or company. Flood insurance is not available to residents of communities that do not participate in the National Flood Insurance Program. The coverage is available separately from your homeowner’s policy through a program developed by private industry and the federal government. The federal government determines whether an area is prone to flooding and considered to be in a flood plain. Flood certifications will indicate whether the property lies within an area so designated.
Things to consider
Contact your insurance agent to purchase the flood insurance and to learn more about your eligibility.
There is a standard 30-day waiting period for new applications and endorsements for coverage.
You will not be insured if purchase a policy few days before the flood.
25% of all flood loss claims are filed in areas of low to moderate risk.
Buy a policy with guaranteed replacement-cost coverage, or get you home appraised every few years to make sure you have enough insurance.
When comparing insurers, one question to ask is how quickly are your claims resolved?
Types of Flood Insurance Coverage available
Policies are available in three forms: General Property, Dwelling and Condominiums
All policies have deductibles for both building and contents coverage, incase you purchase contents coverage.
Exclusions
Walkways, driveways, patios, Contents in basements are not covered with a few exceptions such as dryer, freezer and washer.
First Steps after your property got flooded:
Call your insurance company's (24 hour) Emergency Helpline as soon as possible. They will be able to provide information on dealing with your claim, and assistance in getting things back to normal. Keep a record of the flood damage (especially photographs or video footage) and retain correspondence with insurers after the flood. Commission immediate emergency pumping/repair work if necessary to protect your property from further damage. This can be undertaken without insurer approval (remember to get receipts). Get advice where detailed, lengthy repairs are needed. Your insurer or loss adjuster can give advice on reputable contractors / tradesmen. Beware of bogus tradesmen and always check references. Check with your insurer if you have to move into alternative accommodation as the cost is normally covered under a household policy. Make sure your insurance company knows where to contact you if you have to move out of your home.
Tips to cleanup after flooding:
Find out where you can get help to clean up. Check with your local authority or health authority in the first instance or look under 'Flood Damage' in Yellow Pages for suppliers of cleaning materials or equipment to dry out your property. It takes a house brick about one month per inch to dry out. Open doors and windows to ventilate the house, but take care to ensure your house and valuables are secure.
Contact your gas, electricity and water company. Have your power supplies checked before you turn them back on to make sure they have dried out. Wash taps and run them for a few minutes before use. Don’t attempt to dry out photos or papers - place them in a plastic bag, and if possible store them in the fridge. Throw away food which may have been in contact with floodwater - it could be contaminated. Contact your local authority Environmental Health department for advice. The Citizens Advice Bureau and other organisations may be able to help if you feel under pressure, their numbers can be found in the phone book. Don’t think it can’t happen again. Restock your supplies.
Click here for more Flood Insurance related resources from our resources section. Contains many guides and information collected from many government agencies.
Learn more about the national flood insurance program if you are in united states. click here.
If you are living near a river you got to read this section on Living near a river - flood insurance.
Hurricane Insurance
Hurricane Insurance is an insurance that covers loss resulting from hurricane damage.
A hurricane is a tropical storm with winds that have reached a constant speed of 74 miles per hour or more. Hurricane winds blow in a large spiral around a relative calm center known as the "eye." The "eye" is generally 20 to 30 miles wide, and the storm may extend outward 400 miles. As a hurricane approaches, the skies will begin to darken and winds will grow in strength. As a hurricane nears land, it can bring torrential rains, high winds, and storm surges. A single hurricane can last for more than 2 weeks over open waters and can run a path across the entire length of the eastern seaboard. August and September are peak months during the hurricane season that lasts from June 1 through November 30. (source: FEMA)
Worldwide Tropical Cyclone Names
Atlantic Names
Arlene, Bret, Cindy, Dennis, Emily, Franklin, Gert, Harvey, Irene, Jose, Katrina, Lee, Maria, Nate, Ophelia, Philippe, Rita, Stan, Tammy, Vince, Wilma
Atlantic Ocean and Eastern Pacific Ocean are the two list names which are rotated every year. More than 21 named Atlantic cyclones occur in Atlantic basin in a season. For the hurricanes that are severe and cause a lot of property damage and/or loss of life, the name is retired because re-using it is felt to be insensitive. The name is then not used for at least ten years.
Tips on preparing your home for a Hurricane
Be prepared for the worst, as each hurricane is different.
Investing in flood insurance saves you from the damage caused by hurricane related floods.
Take an advice from your engineer on how to make your home more resistant to hurricane damage.
Install storm doors. You will also need strong screws or nails that will be long enough to go through the wood around the window frame.
Do not use electrical appliance during the storm.
Have a landline phone service instead of cordless phone as hurricanes will put you out of power service.
Create a network of relatives, friends and neighbors to aid you in case of emergency.
Keep an emergency kit which includes medicines, water, food, cash, important documents, first aid kit etc. Make arrangements for your pets.
As most policies usually cover damage caused from wind and rain, check your home owner’s insurance policy as to what it covers. Contact your local insurance agents and check out for the requirements and replacement coverage. Be cautious in choosing your building contractors, as they encourage you to spend a lot of money on temporary repairs.
Many can get help from their own life insurance policy. Over half of life insurance policyholders own policies that have cash value. The best use of this cash value is a loan -money that can be borrowed from the policy without waiting for lender’s approval. No matter the money is not taxable as you are borrowing against your own money, but the lender does charge interest on the loan; which is fixed on some policies. Keep in mind that insurance coverage varies by state and by company; it has its own claims filing procedures.
How to submit life insurance claims after disaster - To claim the insurance amount you need to submit the proof of insurance policy made.
You need to contact your agent who sold you the policy either by phone or in person to let them know you have sustained a loss.
You need to submit your proof of ownership and damage documentation of what you lost and its worth.
The best way to document your claims is to make an inventory of everything you own.
You can hire an attorney and file a complaint with your state insurance department if you are not happy with the claim amount settled.
If you’re still not satisfied you can own your public insurance adjustor as they will try and reach quick settlements. You need to pay them a percentage of your claim as they are regulated by the states.
A hurricane is a tropical storm with winds that have reached a constant speed of 74 miles per hour or more. Hurricane winds blow in a large spiral around a relative calm center known as the "eye." The "eye" is generally 20 to 30 miles wide, and the storm may extend outward 400 miles. As a hurricane approaches, the skies will begin to darken and winds will grow in strength. As a hurricane nears land, it can bring torrential rains, high winds, and storm surges. A single hurricane can last for more than 2 weeks over open waters and can run a path across the entire length of the eastern seaboard. August and September are peak months during the hurricane season that lasts from June 1 through November 30. (source: FEMA)
Worldwide Tropical Cyclone Names
Atlantic Names
Arlene, Bret, Cindy, Dennis, Emily, Franklin, Gert, Harvey, Irene, Jose, Katrina, Lee, Maria, Nate, Ophelia, Philippe, Rita, Stan, Tammy, Vince, Wilma
Atlantic Ocean and Eastern Pacific Ocean are the two list names which are rotated every year. More than 21 named Atlantic cyclones occur in Atlantic basin in a season. For the hurricanes that are severe and cause a lot of property damage and/or loss of life, the name is retired because re-using it is felt to be insensitive. The name is then not used for at least ten years.
Tips on preparing your home for a Hurricane
Be prepared for the worst, as each hurricane is different.
Investing in flood insurance saves you from the damage caused by hurricane related floods.
Take an advice from your engineer on how to make your home more resistant to hurricane damage.
Install storm doors. You will also need strong screws or nails that will be long enough to go through the wood around the window frame.
Do not use electrical appliance during the storm.
Have a landline phone service instead of cordless phone as hurricanes will put you out of power service.
Create a network of relatives, friends and neighbors to aid you in case of emergency.
Keep an emergency kit which includes medicines, water, food, cash, important documents, first aid kit etc. Make arrangements for your pets.
As most policies usually cover damage caused from wind and rain, check your home owner’s insurance policy as to what it covers. Contact your local insurance agents and check out for the requirements and replacement coverage. Be cautious in choosing your building contractors, as they encourage you to spend a lot of money on temporary repairs.
Many can get help from their own life insurance policy. Over half of life insurance policyholders own policies that have cash value. The best use of this cash value is a loan -money that can be borrowed from the policy without waiting for lender’s approval. No matter the money is not taxable as you are borrowing against your own money, but the lender does charge interest on the loan; which is fixed on some policies. Keep in mind that insurance coverage varies by state and by company; it has its own claims filing procedures.
How to submit life insurance claims after disaster - To claim the insurance amount you need to submit the proof of insurance policy made.
You need to contact your agent who sold you the policy either by phone or in person to let them know you have sustained a loss.
You need to submit your proof of ownership and damage documentation of what you lost and its worth.
The best way to document your claims is to make an inventory of everything you own.
You can hire an attorney and file a complaint with your state insurance department if you are not happy with the claim amount settled.
If you’re still not satisfied you can own your public insurance adjustor as they will try and reach quick settlements. You need to pay them a percentage of your claim as they are regulated by the states.
Home Owner's Insurance - Portal
Home Owner's Insurance - Portal Home insurance, or homeowners insurance, is an insurance policy that combines insurance on the home, its contents, loss of use (additional living expenses) and, often, the other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home.
In this section we try to bring as much information possible about Homeowner's Insurance and the different aspects of the same. The following sections will cover most of what you really need to know about Home Owners insurance.
Home Insurance - what is!?
Renter's Insurance - special section.
What is in a standard homeowners insurance policy?
What type of insurance do I need for a co-op or condo?
What type of disasters are covered?
How do I take a home inventory and why?
BUYING AND SAVING MONEY
How much homeowners insurance do I need?
Where can I buy insurance?
How do I pick an insurance company?
How can I save money?
What information do I need to provide to my agent?
What if I can't get coverage?
How often should I review my policy?
HELP! I HAVE TO FILE A CLAIM
How do I file a homeowners claim?
How does the payment process work?
How is the settlement amount determined?
What can I do if I am having trouble settling my claim?
Who is a public adjuster and why does a property owner need one?
How can I avoid scams after a disaster?
HOMEOWNERS TIPS
Dog bite liability
Surviving severe cold weather
Grilling safety
Home security
Lawnmower safety
Pool safety
Protecting your house from mold
Protecting your bike from theft
Remodeling your home
Winter weather preparation
HomeOwner's Insurance Additional FAQWhat's the difference between cancellation and non-renewal?
Can I own a home without homeowners insurance?
How much will my Home Insurance Cost?
Are there different types of policies?
Do I need separate coverage for jewelry?
Should I purchase an umbrella liability policy?
In this section we try to bring as much information possible about Homeowner's Insurance and the different aspects of the same. The following sections will cover most of what you really need to know about Home Owners insurance.
Home Insurance - what is!?
Renter's Insurance - special section.
What is in a standard homeowners insurance policy?
What type of insurance do I need for a co-op or condo?
What type of disasters are covered?
How do I take a home inventory and why?
BUYING AND SAVING MONEY
How much homeowners insurance do I need?
Where can I buy insurance?
How do I pick an insurance company?
How can I save money?
What information do I need to provide to my agent?
What if I can't get coverage?
How often should I review my policy?
HELP! I HAVE TO FILE A CLAIM
How do I file a homeowners claim?
How does the payment process work?
How is the settlement amount determined?
What can I do if I am having trouble settling my claim?
Who is a public adjuster and why does a property owner need one?
How can I avoid scams after a disaster?
HOMEOWNERS TIPS
Dog bite liability
Surviving severe cold weather
Grilling safety
Home security
Lawnmower safety
Pool safety
Protecting your house from mold
Protecting your bike from theft
Remodeling your home
Winter weather preparation
HomeOwner's Insurance Additional FAQWhat's the difference between cancellation and non-renewal?
Can I own a home without homeowners insurance?
How much will my Home Insurance Cost?
Are there different types of policies?
Do I need separate coverage for jewelry?
Should I purchase an umbrella liability policy?
Home Owner's Insurance - Portal
Home Owner's Insurance - Portal Home insurance, or homeowners insurance, is an insurance policy that combines insurance on the home, its contents, loss of use (additional living expenses) and, often, the other personal possessions of the homeowner, as well as liability insurance for accidents that may happen at the home.
In this section we try to bring as much information possible about Homeowner's Insurance and the different aspects of the same. The following sections will cover most of what you really need to know about Home Owners insurance.
Home Insurance - what is!?
Renter's Insurance - special section.
What is in a standard homeowners insurance policy?
What type of insurance do I need for a co-op or condo?
What type of disasters are covered?
How do I take a home inventory and why?
BUYING AND SAVING MONEY
How much homeowners insurance do I need?
Where can I buy insurance?
How do I pick an insurance company?
How can I save money?
What information do I need to provide to my agent?
What if I can't get coverage?
How often should I review my policy?
HELP! I HAVE TO FILE A CLAIM
How do I file a homeowners claim?
How does the payment process work?
How is the settlement amount determined?
What can I do if I am having trouble settling my claim?
Who is a public adjuster and why does a property owner need one?
How can I avoid scams after a disaster?
HOMEOWNERS TIPS
Dog bite liability
Surviving severe cold weather
Grilling safety
Home security
Lawnmower safety
Pool safety
Protecting your house from mold
Protecting your bike from theft
Remodeling your home
Winter weather preparation
HomeOwner's Insurance Additional FAQWhat's the difference between cancellation and non-renewal?
Can I own a home without homeowners insurance?
How much will my Home Insurance Cost?
Are there different types of policies?
Do I need separate coverage for jewelry?
Should I purchase an umbrella liability policy?
In this section we try to bring as much information possible about Homeowner's Insurance and the different aspects of the same. The following sections will cover most of what you really need to know about Home Owners insurance.
Home Insurance - what is!?
Renter's Insurance - special section.
What is in a standard homeowners insurance policy?
What type of insurance do I need for a co-op or condo?
What type of disasters are covered?
How do I take a home inventory and why?
BUYING AND SAVING MONEY
How much homeowners insurance do I need?
Where can I buy insurance?
How do I pick an insurance company?
How can I save money?
What information do I need to provide to my agent?
What if I can't get coverage?
How often should I review my policy?
HELP! I HAVE TO FILE A CLAIM
How do I file a homeowners claim?
How does the payment process work?
How is the settlement amount determined?
What can I do if I am having trouble settling my claim?
Who is a public adjuster and why does a property owner need one?
How can I avoid scams after a disaster?
HOMEOWNERS TIPS
Dog bite liability
Surviving severe cold weather
Grilling safety
Home security
Lawnmower safety
Pool safety
Protecting your house from mold
Protecting your bike from theft
Remodeling your home
Winter weather preparation
HomeOwner's Insurance Additional FAQWhat's the difference between cancellation and non-renewal?
Can I own a home without homeowners insurance?
How much will my Home Insurance Cost?
Are there different types of policies?
Do I need separate coverage for jewelry?
Should I purchase an umbrella liability policy?
Car Insurance - Section Home
Car Insurance typically called Auto Insurance protects the policy owner against financial damages in case of an accident. Accidents big and small happen each day right from a small stone hitting your windshield to a massive rollover which gives your car the status of being totaled. There are many components you need to understand about your Car Insurance and we try to bring as much information possible in this section.
The Car Insurance policy has three main types of coverage
Property Coverage - this helps pay for the damages to your vehicle and will cover if your car gets stolen
Medical Expense Coverage - When you are in an accident you need help paying the bills for the rehabilitation and treatment to your injuries. Along with it some policies provide lost wages and even funeral costs.
Liability Coverage - This helps with the medical and legal costs of a third party whom you have injured or whose property you have damaged.
Here is the list of items covered in this section click on each topic to read more.
Why does your car insurance cost what it does?
Top things that affect your premium
What is covered by the car insurance policy?
Can I drive legally without insurance? What if I lease a car? Do I need insurance to rent a car? What are the driving laws in my state? Is there a difference between cancellation and nonrenewal?
BUYING A POLICY & SAVING MONEYHow do I choose an insurance company? Where can I buy insurance? How can I save money? How much coverage do I need? What determines the price of my policy? What information do I need to give to my agent or company?What can I do if I can't find coverage? How do I insure my teenage driver? Should I purchase an umbrella liability policy? Will my insurance cover a rental car after an accident?
HELP! I HAVE TO FILE A CLAIM
How do I file a claim? What should I do if I am having trouble settling my claim? If I file a claim, will my premium go up? How are the value of my car and the cost of repair determined? What are my rights when filing a claim? Can my insurance company require me to use certain types of auto repair parts?
SAFETY TIPS
Shopping for a Safe Car Teenagers & Safe Cars Air Bag Safety At the Scene of an Accident Car Breakdown Safety Child Safety Seats Cell Phones & Driving Road Rage Elderly Drivers Preventing Carjacking / Theft Driving in Bad Weather Avoiding Deer / Car Collisions
Why does your car insurance cost what it does?
The cost of car insurance doe not seem even a little bit fair these days does it? Nope. It seem so random, you will find that it differs from person to person, even if they drive the same car? How is that possible? Car insurance should cost the same for everyone right?
Wrong. Why should those with good clean driving records pay the same amount of money for serial crashers? We shouldn’t. It is those bad drivers that are driving (no pun intended) up the cost of car insurance. But that is just one of the factors that can affect how much you pay each month for your car insurance.
Car insurance is something that we all have to have if we want to drive on the road. Even if you live in a place where it is not required by law it is still a very good idea to get car insurance. Only car insurance will protect you if you get into a car accident. Accidents are called accident for a reason, no one plans to go out and get into one. If you are unlucky enough to get into one you will have the peace of mind knowing that you will not have to put out the money to get your car or the other car fixed. Good car insurance will even cover you if someone in one of the vehicles gets injured. Without car insurance you could find yourself getting sued for millions of dollars, do you have that kind of money to put out? We don't think so , that is why you need to get car insurance to take care of you.
Top things that will affect your car insurance premium
Here are the top things that will affect how much money your car insurance is costing you:
Your driving record
If you have a bad driving record you are going to be putting out more money for your car insurance each month. The longer you go without having an accident the lower your car insurance rate will get.
Want to put more people on your policy?
Adding people to your car insurance policy can affect the amount of money that your car insurance costs you. If the other person has a bad driving record then you may find yourself having to pay their rates for your insurance.
Age
If you are young you could be facing higher car insurance rates as well. This is because you are not as experienced a driver and therefore you are seen as a higher risk. The same is true if you are a male. Men are riskier to insure than females and this means that you may have to pay more.
Get an alarm
If you get an alarm and you agree to use other anti theft devices you may be able to get a discount on your car insurance. Ask your car insurance agent what kinds of measures you could put in place that would allow them to give you a better deal on your car insurance
The Car Insurance policy has three main types of coverage
Property Coverage - this helps pay for the damages to your vehicle and will cover if your car gets stolen
Medical Expense Coverage - When you are in an accident you need help paying the bills for the rehabilitation and treatment to your injuries. Along with it some policies provide lost wages and even funeral costs.
Liability Coverage - This helps with the medical and legal costs of a third party whom you have injured or whose property you have damaged.
Here is the list of items covered in this section click on each topic to read more.
Why does your car insurance cost what it does?
Top things that affect your premium
What is covered by the car insurance policy?
Can I drive legally without insurance? What if I lease a car? Do I need insurance to rent a car? What are the driving laws in my state? Is there a difference between cancellation and nonrenewal?
BUYING A POLICY & SAVING MONEYHow do I choose an insurance company? Where can I buy insurance? How can I save money? How much coverage do I need? What determines the price of my policy? What information do I need to give to my agent or company?What can I do if I can't find coverage? How do I insure my teenage driver? Should I purchase an umbrella liability policy? Will my insurance cover a rental car after an accident?
HELP! I HAVE TO FILE A CLAIM
How do I file a claim? What should I do if I am having trouble settling my claim? If I file a claim, will my premium go up? How are the value of my car and the cost of repair determined? What are my rights when filing a claim? Can my insurance company require me to use certain types of auto repair parts?
SAFETY TIPS
Shopping for a Safe Car Teenagers & Safe Cars Air Bag Safety At the Scene of an Accident Car Breakdown Safety Child Safety Seats Cell Phones & Driving Road Rage Elderly Drivers Preventing Carjacking / Theft Driving in Bad Weather Avoiding Deer / Car Collisions
Why does your car insurance cost what it does?
The cost of car insurance doe not seem even a little bit fair these days does it? Nope. It seem so random, you will find that it differs from person to person, even if they drive the same car? How is that possible? Car insurance should cost the same for everyone right?
Wrong. Why should those with good clean driving records pay the same amount of money for serial crashers? We shouldn’t. It is those bad drivers that are driving (no pun intended) up the cost of car insurance. But that is just one of the factors that can affect how much you pay each month for your car insurance.
Car insurance is something that we all have to have if we want to drive on the road. Even if you live in a place where it is not required by law it is still a very good idea to get car insurance. Only car insurance will protect you if you get into a car accident. Accidents are called accident for a reason, no one plans to go out and get into one. If you are unlucky enough to get into one you will have the peace of mind knowing that you will not have to put out the money to get your car or the other car fixed. Good car insurance will even cover you if someone in one of the vehicles gets injured. Without car insurance you could find yourself getting sued for millions of dollars, do you have that kind of money to put out? We don't think so , that is why you need to get car insurance to take care of you.
Top things that will affect your car insurance premium
Here are the top things that will affect how much money your car insurance is costing you:
Your driving record
If you have a bad driving record you are going to be putting out more money for your car insurance each month. The longer you go without having an accident the lower your car insurance rate will get.
Want to put more people on your policy?
Adding people to your car insurance policy can affect the amount of money that your car insurance costs you. If the other person has a bad driving record then you may find yourself having to pay their rates for your insurance.
Age
If you are young you could be facing higher car insurance rates as well. This is because you are not as experienced a driver and therefore you are seen as a higher risk. The same is true if you are a male. Men are riskier to insure than females and this means that you may have to pay more.
Get an alarm
If you get an alarm and you agree to use other anti theft devices you may be able to get a discount on your car insurance. Ask your car insurance agent what kinds of measures you could put in place that would allow them to give you a better deal on your car insurance
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