Don't Miss The Policy Fine Print
Newcastle Herald
Monday March 12, 2001
Q OVER the past 50 years I have built up a large collection of Don Bradman memorabilia. Recently my house was broken into and most of my collection was stolen, along with a small amount of cash and some of my wife's jewellery. We have `house and contents' insurance and after I had contacted the police I called our insurers to let them know what had happened and to begin taking steps to make a claim.
We have had the same insurance policy for 10 years. Every year we just get it renewed. The insurance company told me that my policy was a `stated value' policy, not a `market value' policy or a replacement policy. The company said that they would send me a copy of my policy.
When the policy arrived in the mail I was dismayed to notice that the Bradman collection was valued at just $5000. Ten years ago I had the collection appraised and certified as being worth that amount by a valuer. But of course since Bradman's death the collection is worth more than 10 times that amount. Is there any way I can make the insurer pay me the current market value of the stolen collection?
A IT is unlikely that you will receive more than the certified amount of $5000, indexed to inflation, in compensation for the loss of your Bradman collection.
An insurance policy is a contract. Both parties to the contract ? you and the insurance company ? are obliged to abide by the written terms of the contract.
In your case the insurer agreed to pay you a set amount in the event that certain items were stolen or destroyed. The amount to be paid was based on the nominated value of the items. It was you, the insured, who nominated the value of the items. The insurance company used the nominated value to calculate their level of risk in insuring you. The level of risk is what determines the premium that you are charged.
Both you and the insurance company are bound by the amount you nominated.
If an insured item appreciates in value (apart from standard inflation) then you have a responsibility to advise the insurer of this fact. When you do so you are in theory offering to alter the terms of the current insurance contract. The insurance company has the opportunity of either accepting the new term or rejecting the contract.
The insurance company may decide to put up your premium to compensate them for the additional risk they bear in insuring a collection that is now much more valuable.
Every time you renew your insurance policy you should review the stated value of items insured.
Indeed, many insurance companies have a policy of reminding their customers at the time of renewal to consider whether the value of their `house and contents' has increased.
But I know of no Australian authority that states that an insurance company has a duty to remind their customers to review the stated value of their house and contents insurance.
Even where an insurance policy states that an item is insured at `current market value', disputes still sometimes arise between insurance companies and their customers.
A common problem is determining whether an item is insured at the current market value at the time the contract was entered into, or at the current market value at the time the item was stolen or destroyed.
In your case, the different interpretations would have resulted in a very different amounts being paid. Reading the fine print of an insurance policy is essential to avoiding an unpleasant surprise when you finally come to rely on your insurer for cover.
Readers of this column should not rely on the information provided when dealing with their own legal problems and should always seek their own independent legal advice before acting. Catherine Renshaw is a solicitor of the Supreme Court of NSW. E-mail questions to renshaws@one.net.au
© 2001 Newcastle Herald
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