PERL01-5: Personal Lines
Insurance
TOPIC 5
Topic 5: All Risks insurance and Watercraft insurance
Introduction
Module Outcome
5. Analyse the different types of Personal Lines insurance products to advise a
client on an appropriate product.
All Risks Section: Concepts and Client Needs
Definition
It is focused on providing cover for clothing and personal effects of the insured, which are regularly
removed from the dwelling.
Clothing
When clothing is not being worn, it will be insured under the Household Contents section and should be
insured for the new replacement value. Clothing is generally insured up to a maximum any one-time
value.
Personal effects
Personal effects are worn or carried and in use while away from the residence or dwelling. Examples
include handbags, makeup, perfume, sound and video equipment, sporting items, cellphones,
jewellery, spectacles and firearms.
Although seen as personal effects, some insurers require that it be specified with the required valuation
certificates or proof of purchase.
All Risks policies are policies of exclusions
All Risks policies differ from other policies in that they do not list the perils against which the insured
is covered for loss or damage. Instead, they list the exclusions of cover.
In addition, it offers cover for perils or events such as loss or damage cause to insured items by
accidentally:
• Dropping
• Bumping
• Knocking over
• Spilling liquid over
Note: Cover for theft is very broad, and there does not need to be forcible and violent entry (except
from vehicles). So, it is covered if it simply disappear from the possession of the insured.
All Risks policies are policies of exclusions
All Risks policies differ from other policies in that they do not list the perils against which the insured
is covered for loss or damage. Instead, they list the exclusions of cover.
In addition, it offers cover for perils or events such as loss or damage cause to insured items by
accidentally:
• Dropping
• Bumping
• Knocking over
• Spilling liquid over
Cover for theft is very broad, and there does not need to be forcible and violent entry (except from
vehicles). So, it is covered if it simply disappear from the possession of the insured.
Cover provided under the All Risks section
Definitions
Insured
Insured means the policyholder named in the schedule and members of his family normally resident with the
insured. All risks section of the policy automatically provides worldwide coverage.
Property insured
Unspecified All Risk Items
It is insured on a first-loss basis, there is a limit per event and the insured selects a limit based on the maximum
value of items worn or carried at any one time. Note: Money, documents, stamp and coin collections and lenses
are excluded from unspecified items.
Specified All Risk Items
These are All Risks items which are generally more expensive and regularly used away from the dwelling.
Insurers usually insist that certain items be specified due to its risky nature or the replacement value thereof.
Examples: Watches, cellphones, pedal cycles, etc.
Conditions specific to Specific Items
Collections
Cover is limited depending on the insurer. Loss of a single stamp is not covered, and a complete page or album
must be lost or destroyed.
Pairs and sets
Protects the insurer from having to pay out the full value of a pair or set when only half or piece of the pair or set
has been lost or damaged.
Car radios
Not used a lot anymore as radios are factory fitted and thus insured with the vehicle.
Contents of caravans
Cannot be insured under the caravan section. You can insure on a first-loss basis, but a lot of insurers are now
moving to Specified All Risks due to the high risk of these items.
Conditions specific to Specific Items (continued)
Safe Deposit
It is fairly common for people to keep jewellery, gold coins and other valuables in a bank safety deposit box for
security purposes. Some policyholders may require insurance for these valuables because the banks do not accept
liability for the contents of safety deposit boxes.
Note: Ideally, cover should be in place not only while the articles are in safe deposit, but also while in the bank
premises.
Specific exclusions applicable to All Risks section
Exclusions applicable to Unspecified All Risks only
• Excesses
• Motor vehicles, trailers, caravans, hang gliders, air-or watercraft.
• More than the specified percentage. (usually, 25% of the sum insured of the item – depending on insurer)
• Property more specifically insured.
Exclusions applicable to Unspecified and Specified All Risks
• Property lost from unattended vehicles unless locked in a boot or concealed in a compartment inside the locked
vehicle, or unless there was forcible and violent entry into the vehicle.
• Wear and tear and depreciation.
• Loss or damage caused by gradually operating causes, moths and vermin or during any process of cleaning,
dyeing or renovating. Loss or damage as a results of confiscation or detention by any process of law.
• Cost of reproducing data, sounds and images.
• Electrical and mechanical breakdown.
• The special value any article may have as part of a set.
Warranties applicable to All Risks section
Lock safe warranty
Any one single item of jewellery exceeding a certain amount, example: R10 000 or more (depending on insurer) in
value may be required to be locked away in a SABS-approved safe when not actually worn or carried on the
person.
Lock Boot warranty
Also referred to a “unattended vehicle warranty”, places a condition on the policy that items that are left
unattended in vehicles will not be covered for the theft peril if not locked in the boot or in the cubby-hole or a locked
vehicle, out of sight or passers-by. Note: This proviso generally applies only to vehicles and not to caravans,
trailers or motor-boats.
Watercraft
Defined events
“Watercraft” refers to the watercraft shown on the schedule and includes equipment that would normally be sold
with the watercraft as one unit.
The pleasure craft policy will cover the Defined Events as described under different articles.
Article 1: (Own Damage)
Covers loss or damage to the watercraft caused by:
a) Theft of the watercraft
b) Damage to the watercraft caused by accident
c) Malicious damage to the watercraft
d) Fire, explosion and lightning
e) Stranding, sinking or collision
f) Accidents in loading/offloading or moving items stored in the watercraft
h) The negligence of any person whosoever
i) Bursting of boilers, but not damage to the boiler itself.
Defined events (continued)
Article 2: (Responsibility to third parties)
The insurer will cover responsibility to third parties where you become legally responsible for:
- Accidental loss or damage to property
- Accidental death or bodily injury or illness of any person
- Cost for (attempted or actual) removal or destruction of the wreck of the watercraft.
Article 3: (Medical emergency treatment costs)
Medical emergency treatment costs are compensated for injury that the insured suffers as a direct result of an
accidental nature of the watercraft overturning or colliding with any external object other than water.