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february 2016 year
february 2016 year
exclusively for journal "Business"

List of Insured Property: Things You Should Know to Receive Indemnity without Delay

exclusively for journal "Business"

The truth is that in a moment of concluding an insurance agreement a simple error in wording can jeopardize the successful claim settlement in case of an insured event. For example, the “Property Insured” clause in the policy can vividly prove the immense importance of trifles.

In-house lawyers of our clients often tend to introduce tons of amendments to key clauses of the agreement stipulated by the Insurance Act of Ukraine, such as list of grounds for indemnity denial or the option for the insurer to require additional documents needed for them to make a decision regarding claim settlement. Very often the article of the agreement containing the definition and the description of the property insured is being neglected. Ironically enough, this provision is the very one calling for customization the most.  

If amendments are not made to the standard “Structural parts of buildings/facilities” wording, no indemnity will be paid for the damaged finish
Let’s look into the wording of the “Property insured” clause. If amendments are not made to the standard “Structural parts of buildings/facilities”, no indemnity will be paid for the damaged finish. The standard wording is suitable for insuring the buildings without interior or exterior finish such as hangars or plain warehouses. However, there is even more to that.  “Structural parts of buildings/facilities” often do not include utilities, alarm systems, video surveillance systems etc.

The specified description in the form of “Real estate facility including utilities and interior finish” does not eliminate the problem either. The point is that exterior finish can often be as expensive as the interior one, but if it is not specifically mentioned in the insurance agreement, it does not fall within the policy coverage. Moreover, the question remains whether or not glass elements of the building are covered by such a wording. The answer is “no” unless it was specified in the description of the insured property. What about the elevators, escalators or transformers? Every insurance company has its own terms and conditions defining the limits of the coverage and the items that can be insured in the first place. Are you sure that all of the above does not fall within the category of the exclusions “unless otherwise is provided by the agreement”.

Let’s proceed further. Imagine that your policy is intended to cover the built-in equipment. Does the plasma screen set up at the entrance of the building belong to this category? It’s best to name it specifically in the agreement to avoid collisions in the future.

Do the commercial signs fixed on the front of the trade and entertainment center, or its name itself composed of huge neon letters belong to the category of “exterior finish”? Obviously, it does not. In such cases make sure to list such items separately in the agreement. What about the billboards located outside the TEC? Even if you have them in your books, they are not covered by insurance unless you have included those in the list of the property insured.   Considering that some of them can cost over UAH 500,000, it’s reasonable to pay this nuance a special attention.

Are the construction elements located 300 m away from the insured building, also covered by insurance? Or should they be insured separately despite the fact that they do not have exact address? What about the checkpoints, lifting gates or fencing?

All of the above can and should be insured. Even more, it might be possible to add it to the coverage for free if you negotiate this issue with the insurance company beforehand.

Make sure to think though the list of objects you would like to insure and then put its description into the insurance policy as precisely as possible. If no change is made to the standard “Buildings and construction elements” wording, you risk being left without the indemnity with the ground for the indemnity denial being as simple as your own carelessness or low expertise of your legal department.