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Insure Your Policy Covers You In A Disaster

Insure Your Policy Covers You In A Disaster

Australian marine insurance purchasers are not very aware of the key factors in marine insurance. Let us help you understand what you are or are not getting for your money.

Agreed Value v Market Value 

Jamie MacPhail, managing director of Pantaenius Australia, explains the significant difference between agreed and market value, as well as how wear-and-tear may have a significant impact on how your current insurer deals with any claim you may have.

“Given the complexity of marine insurance and the risks of getting the wrong coverage, you need to make sure that the person who provides you with advice is qualified. The Insurance Act specifically says that if somebody is going to provide financial services industry advice, which insurance advice falls under, that they have to be qualified to provide either general or personal advice.”

As Jamie has said, “The question of whether your policy is for an agreed value or much more likely for market value, is very important. More often than not, we speak to clients who think they have an agreed value policy, but instead have a market value policy (that is, it is based on the value of covered property at the market rate rather than basing the value on actual cost or replacement cost). On so many occasions, a customer thinks a pay-out will be the insured value noted on their policy documents, and yet reading on they will find that it is actually substantially less, that is the market value. Nine out of ten customers have not seen or understood this problem until we point it out to them.”

“In a situation like that, in the event of a total loss, your insurer could hand you the same type of vessel with similar equipment on board that was purchased today for a lot less than the value noted on your policy or what you may have paid say three years ago, and you have zero comeback. The difference could well be several hundred thousand dollars.”

All-Risk v Named Peril 

“The most common type of policy here in Australia is a ‘named peril policy’. In these policies, it describes the risks that are covered. These policies mention each and every risk which falls under the policy, an accident for example, then there is cover to a certain extent, but of course there are always some exclusions,” explained Martin Baum, managing director of the Pantaenius Yacht Group.

“Pantaenius write All-Risk policies in Australia. They are simple to understand. If we don’t specifically exclude a peril (an event which has caused a loss), then it is automatically covered.”

“The problem for the client with the common ‘named peril policy’ is the burden of proof lies with the client, whereas the burden of proof with the all-risk policy lies with the insurer.”

“By its nature, the all-risks policy is more transparent, easier to read and you know what you are getting. It doesn’t necessarily mean that every named peril policy covers less than the all-risk policy, however. It always depends on the wording.”

“However, we only have 18 exclusions, with a number falling under fraud or deception, which is a lot less than the pages and pages that are attached to most ‘named peril policies’.

We always try and reinvent the wheel and become more progressive and client-friendly. This is the Pantaenius way.