Your insurance products demystified
Press Office: Minet
By Khalid Salleh, Risk Officer – Life, Minet Kenya
In 1999, a rather resilient tabloid rumor returned American singer Jennifer Lopez to international headlines. It was reported that she had gone ahead to insure, among other body parts, her own derriere for $27 million. She has publicly denied taking out the policy, but the reason we still talk about it years later is because the story is simply odd, but not entirely unbelievable.
Celebrities have for long taken out novelty insurance products for various body parts, albeit with less brouhaha than was accorded the Jennifer Lopez. English footballer David Beckham at the peak of his career had a £100 million insurance policy for his legs. His countryman, Keith Richards, guitarist for The Rolling Stones, insured his middle finger for $1.6 million (in reality it was both his hands but exaggeration is how tabloids sell).
While some may dismiss these policies as celebrity shenanigans, at the heart of it is a key principle of insurance: insurable interest. Any deformity to Keith Richards’ hands, the tools of his trade, has the potential to negatively impact future income. In this light, he is no different from a surgeon who insures his hands. You can practically insure anything, as long as you can show how you will suffer direct and significant loss, financial or otherwise, as a result of losing the insured item. The insurance market offers an array of insurance products available to businesses and individuals alike. Here is your quick guide to some of our insurance products, and what events they are intended to protect against. Are all your insurable interests insured?
Various classes of motor insurance exist; Third Party insurance covers against loss and damage sustained by others as a result of your vehicle’s accident, while Comprehensive insurance will cover the driver and car as well. Fire and Theft insurance covers the risk of fire damage or theft and some insurances increase the scope of their policies by including contents of the car, road rescue, and medical reimbursement.
Imagine the distress of walking into your house one day to find the contents of your house been relocated by some overzealous robber. Or, to find your house flooded as the neighbour forgot to close a faucet. Wouldn’t it be nice to have an insurance that protects your house and its contents from such risks? That is exactly the cover that a Domestic Package Insurance provides. Some policies in the market even provide for an additional cover for a domestic worker, while others extend coverage to mobile electronics such as your laptop and phone even when outside the house.
Something for the business
Corporate interests can be protected through an array of specialised products. All Risks Insurance will protect a business’ property from the risks of damage by accident or any peril like fire, falling objects and water damage. The risk of theft of moveable assets can be insured through a Burglary Insurance product, while loss of business assets through an employee’s fraudulent or dishonest action can be covered by a Fidelity Guarantee policy. Money Insurance will provide coverage for loss of cash and its equivalents. The Goods in Transit insurance can apply to goods belonging to or entrusted to the policyholder which are outside the business premises, whether in transit or in temporary storage.
What about my tech?
Machinery and Electronics owned by the business have inherent risks including breakdown, mechanical damage and increased cost of working after the loss. Printers, computers, servers and the like are placed under an Electronic Equipment Insurance Policy to protect them from the more unique risks inherent to the technological world. Beyond physical damage, data security has become a major concern for organizations. Cyber Security Insurance products will protect businesses against the fallout of a data breach.
Suppose you get sued…
More and more organisations feel the need to protect themselves against court-awarded payments in the event the organisation is found liable for bodily injury, loss of life or damage to property. The industry’s answer to these risks is specialised liability covers underwritten for different risk groups.
Employer’s Liability covers the insured should a loss befall their own employee through the employer’s fault or negligence. Product Liability protects the insured from losses to their customers arising from a defective product sold to them. A Director’s and Officer’s Liability policy may be put in place to protect the insured when deemed liable for losses arising out of legal action for alleged wrongful acts of its directors and officers in their respective capacity.
And for the business’ most important asset
The Work Injury Benefits Act (WIBA) of our constitution will compensate an employee in the event the employee suffers an accident while carrying out their vocation. The employee and their beneficiaries are entitled to standard compensation for bodily injury or loss of life. All employers are legally required to have WIBA Insurance enabling them to compensate employees in the event of work accidents.
A little for both worlds
Personal Accidents are insurable for both individuals and organisations. The cover offers compensation for bodily harm/disability and loss of life in the event of an accident, which can be supplemented with a Life Insurance policy where sums assured are paid out depending on the policyholder’s state. Examples include Whole Life policies, Term Assurance policies and Endowment policies. Specialised products such as Unit Linked Endowment policies, Critical Illness insurance and Last Expense products fall into this category where the insurable interest is human life.
One of the most appreciated insurance products is health insurance. A health insurance policy is designed to take up the policyholder’s medical expenses. With rising cost of medical care and limited access to good facilities, it has become more convenient to have a policy that not only bears the cost, but also eases the procedures of getting medical care. Providers offering services such as scheduled appointments and to-your-door delivery of prescriptions are now built into health insurance products for the convenience of the insured.
The above list is by no means exhaustive. Niche covers such as Livestock Insurance, Travel Insurance, Professional Indemnity and Trade Credit Insurance have been left out due to their restricted appeal but remain just as important. At the end of the day, the insurance policy needs to be based on the specific requirements of the purchaser. Everybody wants their insurance solution to be favourable in its terms and conditions, and to be affordable in its pricing. It is important for the insured to have knowledge of the finer nuances of the policy they intend to take in order to ensure the insurable interest is covered. Our advice is to always make sure to seek the guidance of insurance professionals in choosing the right insurance products for you and your business.
Minet is a trusted pan-African advisor that meets the uncertainties of tomorrow by delivering risk and human capital solutions today. As the largest Aon Global Network Correspondent, Minet has access to a network of over 50,000 colleagues in 120 countries as well as to proprietary data, research and analytics which enable us to manage and secure the risks of tomorrow and provide clients with an unrivaled advantage. For more information, please visit www.minet.com