‍The Premium Yarn - The One Insurance Blog that won't put you to sleep.

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Welcome to this month's edition of the Premium Yarn!

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I recently came across a post from a broker on LinkedIn that really resonated with me.

The post was about a client who had lost everything in a fire at their manufacturing facility. Although the client had insurance that covered the cause and loss, the insurance didn’t pay out.

Why not, you may ask?

The client missed a single routine equipment inspection that was required by the insurer. Unbeknownst to them, this broke a rule in their insurance policy.

As a result, the insurer would not pay out.

Insurance comes with policy clauses you need to be across

On top of the usual exclusions in your wording, some insurance policies also have specific clauses and conditions applied, generally around a certain industry – for example, a “commercial cooking warranty” for the hospitality sector that restaurants, cars and cafes operate within, for example.

If these conditions aren’t met, you could be in a breach of your policy - and the insurer many not cover a loss.

Warranty Clauses Example

Let’s look at a typical restaurant situation and a few examples of what one insurer's cooking warranty includes:

1. All deep fryers and other cooking equipment in which frying is carried out at the SITUATION must have close-fitting metal lids. The metal lid must be fitted and in the closed position outside normal working hours and when the fryer is not in operation. During working hours, the metal lid must be readily available for immediate use at all times if required.
2. A fire blanket, not less than 1.2 meters x 1.8 meters in size, must be installed in a conspicuous place in the vicinity of, but at a safe distance away from, the commercial cooking operation. The fire blanket must be readily available for immediate use at all times if required.
3. At least one correctly labelled fire extinguisher, suitably rated “F” in accordance with AS/NZS 1850:2009, must be mounted in a conspicuous place in the vicinity of, but at a safe distance away from, the commercial cooking operation. The fire extinguisher must be readily accessible for immediate use at all times if required. All fire extinguishers at the SITUATION must be serviced at least once a year and maintained in efficient working order at all times.

Importance of Adhering to Clauses

If you were to have a claim in your restaurant or café, and it was linked to one of these clauses that weren’t being adhered to, then you could also face a claim not being paid out, or the payout being dramatically altered.

Most insurance brokers tend to focus on selling coverage instead of teaching about these rules and how policies actually work. It's easier to talk about policy limits than maintenance requirements, much less boring too, to be honest.

Domestic Space Clauses

In the domestic space, clauses are much less likely – it’s more rural policies where you’d see them. However, if this has prompted some questions around coverage, then again, I’m more than happy to discuss it together.

Understanding Your Insurance

If you work in an industry where you’re unsure if you have any conditions, then we're always happy to chat and explain over a coffee or an email. We’d rather the questions were asked now, and we can put a plan in place, than lament over a claim not being paid out. There is no point in having coverage in place if you don’t understand it, or how it’ll actually respond to a claim!

Trend of Underinsurance

One more thing: relating to the above, I’m noticing a trend of underinsurance, incorrect policies, and people being placed with the wrong insurers when they approach us to look at their policies. Not understanding your insurance coverage is normal because you’re not an adviser, but if you’re feeling like things are a bit tight currently, you’re unsure why you’re insured for some things and not others, or you know others who might be struggling, particularly with business insurance, then why not tell them to reach out? You get free advice from our team, and likely a free coffee – what’s not to love about that!

As always, anything else, do give us a bell, we’re always happy to help 😊

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Joshua Rhind | General Manager

Caveo - powered by Velocity Financial

38 Vivian Street, Te Aro, Wellington

M: 027 384 6444

E: joshua@caveo.co.nz

W: www.caveo.co.nz

Read Caveo's disclosure here.

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‍Always get professional advice

The information shared in this post is meant to be general guide to support you on your journey. When making important decisions about your finances, we encourage you to seek independent financial advice first, tailored to your unique situation.  As well as talking with a financial adviser, make sure you talk to your lawyer and accountant too – together they'll help you find the best solution for your specific situation. Our knowledgeable financial advisers are here to help. Check out our website for the details about our financial advisory services in our disclosures  https://www.velocityfinancial.co.nz/disclosure-statement. 

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