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  • Duration, exclusions, deductibles, premiums

     
     

    Duration of cover 

    There will be a clear stipulation from which moment until which moment cover is granted. Read that part of the policy or certificate very carefully; if you experience a loss outside that given timeframe, you are not covered. Note too that 'warehouse to warehouse' does not mean any warehouse that may be suitable - it is always a warehouse at the stated place of destination. This may well be different from the final destination the goods may travel to.

    Exclusions 

    The policy or certificate may contain exclusion of particular risks, for example the nuclear energy exclusion clause. Another likely exclusion is for war on land, not to be confused with coverage against SRCC risks (strikes, riots, civil commotion). There will also be other exclusions, sometimes based on the location of a particular risk.

    Deductibles or franchises 

    It may well be that the underwriter does not cover all of the risk and only agrees to insure 80%. Alternatively the first so many thousands of dollars of any claim will not be paid. Indirectly, this is the same thing. The objective of such stipulations is to ensure that the client, the insured, makes every effort to avoid claims occurring, that is, they practice risk avoidance.

    Agreeing to deductibles - also called franchises - will also save some premium, but avoid a situation where in case of a major disaster the total amount of such deductibles could put the company's financial health at risk.

    Premiums 

    The policy will stipulate the amount of premium to be paid, how the monthly declarations shall be made to the underwriters, and the way and time limit within which invoices need to be paid. Remember that unpaid premiums can result in cover lapsing. Underwriters usually view single risks as more speculative and more expensive to administer than declarations under an open cover or declaration policy. Rates under open covers are therefore generally much lower than those for single risks.

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