The Observer (Kampala)

Uganda: What Exactly Does Your Insurance Policy Cover?

Many all over the world will wake up this morning trying to get the news over the presidential election results in the United States. Unfortunately, too, nature's fury was unleashed recently across America's north-eastern seaboard by the largest Atlantic tropical system recorded in history - Hurricane Sandy.

Leaving death and destruction in its wake across the Caribbean, the US states of New Jersey and New York were not spared. It is estimated that 'Superstorm' Sandy has accounted for up to $20 billion in insured losses alone.

With all the resulting confusion, questions are being asked by home, business and car owners plus all others who have had their insured property damaged or lost totally. The answers haven't been as straightforward as might have been expected.

Robert Hartwig, president of the Insurance Information Institute, was quoted in a recent article as having said: "If your roof is missing, that's not from flooding, and if the basement is flooded, that's not from wind".

Many claimants will also be shocked to learn that damage from flooded creeks and surging seas isn't covered by most property insurance. Further still, with hurricane damage having a higher excess than ordinary wind damage, those lucky enough to have insurance for hurricane damage still have to pay a large percentage of their claim.

An excess of 5% would mean if the insured value of your house is $250,000, then your excess will be as high as $12,500. Knowing that your insurer won't pay as much as you expect can be extremely frustrating, especially after a devastating loss.

The insurance claim stage can be emotionally overwhelming. While nothing can prepare anyone for the eventualities in life, knowing exactly what your insurance policy covers after deducting the excess, will prepare you well at the stage of asking for your claim.

The name given to an insurance policy doesn't always reflect what it covers. To many people, insurance against wind damage should pay for hurricane damage. But insurance companies do not agree. Avoid surprises at the claims stage by familiarizing yourself with the finer details of your insurance policy.

The author is a Chartered Insurer and works for IRA.

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