Insurance, at its essence, is quite straightforward. You transfer the risk of potential future financial loss to an insurance company for a known monetary amount called a premium. By doing so, you secure a source of funds from the insurance company, through a claim, to repair or reinstate any damaged assets.
Additionally, you avoid the risk of financial bankruptcy from attempting to raise sufficient funds for these repairs or reinstatements through cash savings or the sale of other assets.
If the concept is so simple, why do you need the services of an expert professional insurance advisor, also known as an insurance consultant?
As with many things in life, the answer lies in the details. A good example can be illustrated by asking the simple question: What constitutes a building, and more importantly, what will get paid if it is completely destroyed?
Your property insurance policy defines what is considered under the building sum insured. This might include the following:
“Building including: architects, surveyors & legal fees, debris removal, civil works, foundations, boundary walls, gates, fences, furniture, fixtures, fittings, electrical installations, air conditioning units, underground pipes and services, all types of glass, equipment including leisure, gym and sports, decoration, water pumps, neon signs and/or sign boards, telephones, lifts, gardens, and landscaping.”
So, if your building is completely destroyed, will the entire building sum insured be paid out? Unfortunately, it’s not that simple. Most insurers impose limits on various elements of this sum insured to ensure no single element is overpaid, potentially leaving insufficient funds to fully reinstate the building.
A common example is: Architecture, Surveyors and Other Professional Fees Clause: 10% of the claim amount, subject to a maximum of AED 100,000.
It is worth noting that you should have a professional building reinstatement valuation undertaken to set your building sum insured. This valuation should follow the insurance definition of a building and typically include an allowance of 5% to 10% for professional fees.
Let’s assume our building reinstatement valuation sets the building sum insured at AED 10 million, and the above clauses apply. If the valuation includes a 10% allowance for professional fees, this amounts to AED 1 million. Given that you’ve paid a premium on this sum insured, you might expect to receive the full AED 1 million in a claim. Unfortunately, the clause limits this to 10%, capped at AED 100,000.
This leaves you to cover the remaining AED 900,000 from your own finances. Now scale this example to a building sum insured in the hundreds of millions or even billions, where the professional fee limit only marginally increases. The financial consequences could be exponentially worse.
In summary, you pay a premium on 100% of the sum insured but might only receive 10% of this amount in a total loss scenario. Not exactly value for money!
This is just one small, but potentially expensive, example of why you need the advice of an expert professional insurance advisor, such as Shory, to be on your side.
With Shory, you can explore a list of the top insurance providers to find the best insurance policies for your personal and business insurance needs. Whether you’re seeking car insurance for personal use or require corporate services like Group Health and Life Insurance, Personal Accident Insurance, Property and Casualty Insurance, Marine & Aviation Insurance, Motor Fleet Insurance, Financial Lines or Specialty Insurance, Shory has you covered. Thanks to our network of insurance providers, there’s something for everyone.
With Shory, you don’t just buy insurance, you gain a team of experts who will navigate the intricate details of insurance policies on your behalf. From ensuring your policy covers every critical aspect to ensuring that claims are settled smoothly and efficiently, we take care of it all.
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