In Shakespeares, Merchant of Venice, the merchant Antonio
quips: My ventures are not to one bottom trusted, Nor
to one place; nor is my whole estate, Upon the fortune of
this present year.
The bottom was the terminology of the day to refer to the
ships hold where cargo was kept.
This reference to Venice during the era of the Renaissance
is one of the early literary accounts of the practice of marine
insurance in business. Merchants of the day would divide their
cargo between many small ships, in order to avoid loosing
the entire shipment should a ship go down.
These concepts formed the rational for such institutions as
Lloyds Coffee House of London, when the interests in
the ships fate grew, and was spread among the parties
concerned with the safe return of the vessel to port.
By 1774, the Life Assurance Act, had become law in England,
and its main import was to separate the concepts of gambling
and speculating, from the pure risk of loss of income to the
family of the breadwinner.
The idea of insurable interest was engaged to ensure that
transactions in the emerging industry remained morally tenable.
Today, in most parts of the world, there are two types of
insurances that seem to have been worked into the laws that
apply to citizens, across the board, and made compulsory.
These are: social welfare insurance, and third party liability
Last week, we broached the subject of third party liability
insurance, in terms of the quantum of money that can be claimed,
in the case of death to a third party arising out of a motor
A look at the typical motor vehicle insurance contract available
locally, reveals a most complicated document. There are a
host of references within the contract to memos and exceptions
These are further complicated by amendments, attached to the
Certificate of Insurance. The net result is that the average
person never knows what he or she buys, seldom makes a claim,
and may never be guided by the insurance provider, to claim
what they are entitled to claim in the event of loss.
The adage let the buyer beware is little understood,
and seldom employed by the buyer, but is a handy little tool,
in the hands of the provider.
Let us look at the excess. Excess is really the
self-insurance, or co-insurance factor that is invoked in
every policy, except in Third Party Liability Insurance.
The legal requirement for all motor vehicles in use on the
roads is Third Party Insurance. This by virtue of the risk
that it covers carries no excess.
Comprehensive Motor Policies and Third party Liability, Fire
and Theft Policies carry excess clauses. Some insurers sell
waiver of excess, but hidden in that are certain exceptions
to the waiver.
But what is self-insurance? It is the amount of every claim
that is to be paid by the insured first. The insurer says
to you that in the event of an accident or loss, you the buyer,
will pay money first, before any kind of compensation is paid.
In general, the least amount of excess rings up at about $3,000.
This category of excess, applies to the named insured. For
the same vehicle, with named young drivers, the excess amount
for the same accident can ring up as the first $12,000 of
It really depends on who is in the drivers seat, and
the quality of mercy is irrelevant to the case, although it
droppeth as a gentle rain from heaven.
Next weeksocial insurances