We have got the answers to the most asked insurance questions.
1.What is an insurance?
Insurance is a transfer of risk to insurers at a small price often referred to as premium. The contract is for the insured to be placed in the same financial position as he or she was before the loss.
2.How would you differentiate a genuine insurance intermediary from a bogus one?
The bogus intermediaries will always lack established offices. Potential insured should insist on seeing the licence from the Commissioner of Insurance.Different intermediaries have different requirements that they must fulfil before being licensed.
3.Which insurances are compulsory? What happens when one does not comply?
Only Motor Insurance is compulsory. One would be contravening Chapter 405 of the Statute Laws and is liable to a fine or imprisonment.
4.What kind of cover do I enjoy as a driver of a comprehensively insured motor vehicle?
There are three types of motor cover namely comprehensive, Third Party Fire & Theft and Third Party Only. Employed drivers should be covered under workmen's compensation Act or under Personal Accident Policy, otherwise, the cover for a vehicle does not include the driver.
Party Fire & Theft and Third Party Only. Employed drivers should be covered under workmen's compensation Act or under Personal Accident Policy, otherwise, the cover for a vehicle does not include the driver.
5.What is the difference between third party insurance and comprehensive insurance?
Third party only policy, covers third party bodily injuries and third party property damage; while comprehensive cover extends to cover theft and accidental.
6.How many times is general insurance premium paid?
Traditionally the premium is payable once in a year. However, there is emergence of short-term covers and premium payment by installments. For motor and fire policies, premiums should be paid on commencement of cover.Once in a year. However, there is emergence of short-term covers and premium payment by installments. For motor and fire policies, premiums should be paid on commencement of cover.
7.How often are general insurance policies renewed?
Depending on the term but normally once after twelve months.
8.Must I be insured to live comfortably?
Considering many risks that surround us it is important to be insured.
9.Which class of insurance is the worst performer in terms of claims experience?
The policies with poor claims ratios are Motor, Workmen Compensation and Employers Liability.
10.What is the difference between a broker and an agent?
The difference between an agent and broker is that the former acts on behalf of the insurer and the latter on behalf of the insured. Registration requirements, operations and duty of care are also different.
11.How many Forms of Insurance are there?
There are two forms of insurance namely life (long term) and general (short term).
12.Can I cancel my policy if I am not satisfied with its terms and conditions?
Yes. Under life insurance policy this action must be taken within the first thirty days after receiving the policy document. In case you cancel the policy within the thirty days, you will be refunded the whole premium paid less withholding tax.Regarding general insurance business, cancellation of the policy will lead to a refund of the premiums so far paid.
13.What happens to my policy if I fail to pay insurance premium?
Failure to pay insurance premiums as stipulated in the policy amounts to breach of policy terms and conditions and leads to the termination of the contract
reach of policy terms and conditions and leads to the termination of the contract.
14.What happens to my policy If an insurance company collapses?
If you have a life insurance policy and the insurance company is closed down, your policy remains valid and you should continue paying policy premiums throughout the remaining term of the policy. Failure to continue paying premiums leads to termination of the policy by the insurance company. You have the right to claim under the policy immediately the policy matures.
15.How do I make an insurance claim?
You will need to report any loss or damage to the insurance company in time and ensure that you submit all the necessary documents requested by your insurance company. You are required to co-operate with the insurance company to facilitate the smooth handling of the claim.
Report any loss or damage to the insurance company in time and ensure that you submit all the necessary documents requested by your insurance company. You are required to co-operate with the insurance company to facilitate the smooth handling of the claim.
16.Can I insure my property with more than one insurer?
No. Insurance contracts are guided by principle of indemnity which requires that the policyholder should be taken back to the financial position they were immediately before the loss occurred. Insuring the same property e.g. a house with more than one insurer so as to be paid twice should the insured loss occur amounts to gaining unduly from the contract holder should be taken back to the financial position they were immediately before the loss occurred. Insuring the same property e.g. a house with more than one insurer so as to be paid twice should the insured loss occur amounts to gaining unduly from the contract.
17.Can I insure my life with more than one insurer?
Yes. You can insure your life with more than one insurer. This is because life cannot be valued.
18.Can I sell my vehicle together with its insurance cover?
No. motor Insurance policies are not transferable because they are personal in nature.
19.Can I drive a car without motor vehicle insurance in Kenya?
No. Motor Third Party Risks cover is compulsory in Kenya. Driving without this insurance is illegal in Kenya
20.What factors should I consider when I insure my home?
Firstly determine the amount and type of insurance that you need. The sum insured or coverage limit of the property should equal 100% of its replacement cost. If the policy limit is less than 85% of the replacement cost of your home, any payment from the insurance company will be less than the full cost to replace your home, This is known as "Under Insurance".
Over and above the basic Fire Insurance, decide which, if any, additional coverage you want to add to your policy. For example, do you want personal possessions or household contents covered against theft or burglary?
Once you have decided on the coverage you want in your insurance policy, consult us. We will be able to help you determine if there are any gaps in coverage you might not have been aware of, we can also explain the details of the policy's exclusions and limitations.
21.What are the advantages to using an agent/broker to purchase insurance?
By using an agent to purchase insurance, the policyholder receives more personal service. An agent with whom there is direct contact can be vital when purchasing a product and can prove absolutely necessary when filing a claim.
22.What is a deductible?
A deductible is the cash value amount of damages that you agree you will be responsible for if you have a claim.
Most insurance policies have a deductible which states that a portion of the amount paid for the loss will be subtracted from the amount the insurance company would otherwise pay.
23.Should I report all Motor accidents to the Insurer?
Yes you should. Even if the accident appears minor, it is important that you let your insurance company know about the incident. If you have an accident but do not report it to your insurer, you are taking a risk, even if the damage seems minor. If the other driver sues you weeks or months later, your failure to report the accident might cause your insurer to refuse to honour the policy. And even if they do honour the policy, the delay will certainly make it harder for the insurer to gather evidence to represent you.
24.When is a car written off by an Insurer?
It is up to your insurer to decide whether to pay for repairing your car or to declare it a total loss and pay you its book value. Most standard motor policies will not pay to repair a vehicle if the repairs cost more than the cash value assigned to the car. In practice, there will be little dispute about whether to repair the car if the damage is above 75% of the book value of the car. You may argue about what the pieces of the car were worth when they were assembled as a car. You are entitled to the market price of the car you just lost. You should not get more or less than what you are due.
25.Why should I purchase commercial vehicle insurance for my private pick up vehicle?
This is a Kenya Revenue Authority requirement. A pick up is also categorised as a commercial vehicle in your logbook.
26.How do I make a claim?
Contact us or your agent for a claim form. Complete the claim form and submit it to us together with the police abstract.
27.What is Indemnity?
The insurance company indemnifies, or compensates, the insured in the case of certain losses only up to the insured’s interest.
28.What is the role of Insurance Commission?
The Insurance Commission is a government agency under the Department of Finance. The Commission supervises and regulates the operations of life and non-life companies, mutual benefit associations, and trusts for charitable uses. It issues licenses to insurance agents, general agents, resident agents, underwriters, brokers, adjusters and actuaries. It has also the authority to suspend or revoke such licenses.
29.Why does the Government supervise the operations of insurance companies and their representatives?
Insurance business exists to serve the public. It is therefore charged with public interest.
30.Who may be insured?
Anyone except a public enemy may be insured
31.What may be an insurable interest in life insurance consist of?
Every person has an insurable interest in the life and health:
- Of himself, of his spouse and his children;
- Of any person on whom he depends wholly or in part for education or support; or in whom he has a pecuniary interest;
- Of any person under legal obligation to him for the payment of money, or respecting property or services, of which death or illness might delay or prevent performance; and
- Of any person upon whose life any estate or interest vested in him depends.
In property insurance, is the insured entitled to a return of premium if he should decide to discontinue his policy?
Yes, to a proportionate amount corresponding to the unexpired term of the policy; generally under the short period scale provided for in the policy.
32.May the insurance company cancel a policy? If so, how? May the insured cancel a policy?
Yes, upon prior notice thereof to the insured. However, no notice of cancellation is effective unless it is based on the occurrence, after the effective date of the policy, of one or more of the following:
- Non-payment of premium.
- Conviction of a crime arising out of acts increasing the hazard insured against.
- discovery of fraud or material misrepresentation.
- discovery of willful or reckless act or omission increasing the hazard insured against.
- physical changes in the property insured which result in the property becoming uninsurable.
If the insured has any right of recovery against another party, may the person required to assign such right to the insurance company?
Yes, the company may require from the insured an assignment of all rights of recovery against any party for loss to the extent that payment therefore is made by the company.
Once a property is insured, must the insured inform the company of any change of the description, occupation or construction of the property insured.
The insured must inform the company of any change thereto, otherwise, the company would be relieved from liability unless the insured before the occurrence of any loss or damage obtained the sanction of the company signified by an endorsement upon the policy.
33.What is the basis of the value of the insured property at the time of loss?
The actual cash value at the time of loss, that is, what it would cost to replace the property.
Is it the duty of an agent to determine the value of the property insured and the amount of insurance to be carried?
No, the value of the property should be determined by the insured, rather than the agent. However, the agent should guard as far as possible against over insurance and should check the amount of insurance in relation to the actual value with the insured.
34.What are the effects of non-payment of premium?
Forfeiture of all rights under the policy.
35.What is the meaning of “Authorized Driver” in a motor vehicle policy?
An authorized driver within the meaning of the policy is any of the following:
- The insured; or
- Any person driving on the Insured’s order or with his permission.
What is the purpose of the errors and omissions insurance policy (professional liability or professional indemnity policy) required of insurance or reinsurance broker before a license could be issued.
To indemnify the applicant against any claim for breach of duty as insurance broker or reinsurance broker, as the case may be, which may be available against such applicant by reason of any negligent, act, error or omission.
36.What do you understand by the “no fault claim”?
An insurance company issuing the cover shall pay any claim for death or bodily injuries sustained by a passenger or third party without the necessity of proving fault or negligence of any kind.
37.Does the “no fault claim” apply to claims on property wherein the insurance company is under obligation to make payment immediately?
No, because the “no fault claim” applies only to death or bodily injuries and does not respond to claims for third party property damage.