Application Of Single Article Limit In Home Insurance

One of my major duties as a loss adjuster and claims expert is interpreting and applying the strict wordings of an insurance policy to a claim situation.

To put it bluntly, I am probably the reason your claim was honored, or turned down (insert sad face). And all I did was to bring to the limelight the intentions of your insurance policy in relation to your loss situation by explaining and expanding on the terms and conditions stated therein irrespective of your feelings. Ouch! That hurts right?

 One of such policy conditions you need to be mindful of in your home insurance policy is the Single Article Limit (SAL).

If your insurance company ever told you they wouldn’t pay you a certain amount you felt entitled to, having included the value of the object in your household contents, it is probably due to the application of the SAL clause.

This clause states that…

in the event of a loss, no single item would be considered to be more than a certain (predetermined) percentage of the sum insured on contents under the policy unless such item is specifically insured.

Hold it, don’t get confused. Take a deep breath. Now let me explain it.

For instance, where the total value of all your household content (all the items in your house excluding the value of the house itself) was put at $10,000.00 and the SAL was fixed at 5%, it means that for any single item, the maximum you can claim is $500.00 irrespective of the actual value of the item.

Why do insurance companies have this clause in their policies?

The truth is, the alternative would be a disaster. A policy without limits would mean that anything and everything is admissible. No control, every claim received would have the potential for litigation due to forth and back that could arise out of the inability to arrive at an agreed value.

How do you ensure that you are adequately covered?

When taking up the policy, you should provide the list of your household items with their respective values. That way, each item would be deemed to have been specifically insured (covered). In the event of a loss, the amount stated against each item becomes the basis of indemnity (settlement) unless such value is more than the existing market value of the item at the time of claim.

There is however a catch here, and this is where it gets interesting.

What happens where you missed out an item, or an item not listed got damaged of missing? What happens in the event where you got an additional household item after your policy is up and running and you forgot to inform your insurance company?

As a loss adjuster, I see this genuine oversight on a regular.  

What you should do as actually very simple.

Having listed all the household items that are of note to you, you should have a certain value for “other contents”. In the event of a loss, the SAL would only apply to the “other contents” value. That way, you would still get something for the item you missed out provided you are able to prove the existence of such item.

What a prudent underwriter (your insurance company) would do is to reduce the percentage or value of the SAL, say from 5% to 2% or from $500.00 to $100.00 as deemed fit, because you have already listed out the items that are of value to you. That way, they will not have to pay out so much on an item that was not intended to be covered.

Thank you for reading. We would like to have your views and also know if this post has been of any benefit to you. Kindly like and leave a comment.

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