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Wednesday, July 27, 2005
Osmeña: Wanted: Property insurance brokers
By Antonio V. Osmeña
Estatements
DANGER. Virtually all structures erected on land are subject to the danger of partial damage or destruction from various causes. Everyone dealing with real estate as owner, mortgagee, agent or broker should be familiar with these dangers and the proper means of protection against them—principally, by insurance.
Insurance is the transfer of the risk of loss from the insured to the insurance company. By the payment of the premium to the insurance company, the company agrees to protect the insured against loss in accordance with the policy contract for the amount insured and for the period of time agreed upon.
The ownership of real estate entails a number of risks of financial loss. An owner can protect himself against most of the foreseeable hazards by purchasing adequate and appropriate insurance. Unfortunately, until insurance companies make available true all-risk coverage, which without qualification protects the insured against all hazards, it will be difficult, if not impossible, to enjoy complete freedom from unforeseeable risks.
There are many foreseeable hazards attached to the ownership and maintenance of real estate. The first that comes to mind is the danger of fire. Close behind that is public liability, or, as it is also known, body injury liability.
Other risks for which protection can be secured are damage to plate glass, water damage, sprinkler leakage damage, leasehold loss caused by cancellation of a lease because of fire, and rent loss, or the additional cost of renting other premises during rehabilitation of the damaged premises. Added to these are the dangers of loss from typhoon, explosions, riots, strikes, earthquakes and vandalism.
The fire insurance contract is a contract of indemnity. Its intention, if proper coverage is carried, is to indemnify the assured for monetary loss in such a manner that he will neither gain nor lose financially in the event of fire loss.
Although many companies have established branch offices in the larger communities, the greater share of the insurance business is dependent on services of company agents or insurance brokers. Because of similarity of interests and opportunities to meet insurance prospects, many agents and brokers associate their activities with those of real estate firms.
Most insurance agents are representatives of an insurance company and owe it their loyalty. What Cebu needs is more insurance brokers, who act as independent operators and expert advisers who always serve the interests of their clients.
The broker generally studies the insurance needs by inspecting his client’s premises and then bargains with selected insurance carriers for the best terms and lowest rates obtainable. Often the broker will suggest improvements in the physical conditions of the property, such as the installation of a sprinkler system or the elimination of a hazard that may bring about a lower class rate. This will mean savings in insurance premiums.
The broker, because of his independence, is free to place his insurance business anywhere and prefers companies that he considers financially strong, prompt in the settlement of losses and otherwise competitive in rates and broker commission payments.
(July 27, 2005 issue)
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