Insurance
Posted by Bill Molesworth
Duncan mentioned that Roland had thought, a while ago, that members might like to know a little more about the abstruse business of household insurance and Jim Anderson had kindly volunteered to discuss the issues.
Jim told a story about two businessmen who met on vacation, one using the insurance money from a devastating fire to pay for it and the other the money from a flood. The first wanted to know how to start a flood. His point was that not every claim is legitimate and that the companies must take precautions to ensure their payouts are made to those who deserve them. If the companies fail at this and pay illegitimate claims, the cost eventually comes out of everybody's pocket.
Insurance is the spreading of the losses of the few over the the risk of the many and it has become a fairly precise business. Actuaries can predict the rate and size of claims to be expected, just not which individual will be making the claim. Most have insurance - even groups like the Mennonites, who do not buy insurance, actually cover themselves through community support. When a barn is lost it is put back by communal effort.
The intent is to return the client to their pre-existing condition, to indemnify the client. Policies are what spells out the terms of insurance, what is covered, for how long and against what perils.
Content insurance is now fairly standard across the industry. Companies used to try to establish a depreciated value, but that has now been superseded by replacement cost. This does not mean that the company will replace an item - it will give money, at a fair market value, so the client can buy new.
Claims adjusters investigate the scene and judge the validity of the claim. The onus is on the person insured to prove what they've lost and what it was worth, using bills of sale, manuals, photos, credit card records or witnesses. Unusual items or collections should be documented, appraised and, in some cases, have special coverage.
This is important because sometimes a claim for a special item might seem, to the adjuster, to be out of synch with the rest of the client's lifestyle. Adjusters watch for anomolies and can disallow claims, so keep records.
Jamie Hunter said he had had experiences with the process and knew he had learned a lot. For those who hadn't, he thought Jim's talk would prove to be a great help.
Insurance is the spreading of the losses of the few over the the risk of the many and it has become a fairly precise business. Actuaries can predict the rate and size of claims to be expected, just not which individual will be making the claim. Most have insurance - even groups like the Mennonites, who do not buy insurance, actually cover themselves through community support. When a barn is lost it is put back by communal effort.
The intent is to return the client to their pre-existing condition, to indemnify the client. Policies are what spells out the terms of insurance, what is covered, for how long and against what perils.
Content insurance is now fairly standard across the industry. Companies used to try to establish a depreciated value, but that has now been superseded by replacement cost. This does not mean that the company will replace an item - it will give money, at a fair market value, so the client can buy new.
Claims adjusters investigate the scene and judge the validity of the claim. The onus is on the person insured to prove what they've lost and what it was worth, using bills of sale, manuals, photos, credit card records or witnesses. Unusual items or collections should be documented, appraised and, in some cases, have special coverage.
This is important because sometimes a claim for a special item might seem, to the adjuster, to be out of synch with the rest of the client's lifestyle. Adjusters watch for anomolies and can disallow claims, so keep records.
Jamie Hunter said he had had experiences with the process and knew he had learned a lot. For those who hadn't, he thought Jim's talk would prove to be a great help.