November 30, 2022

Pater Das

Business and General

Tips Excess Insurance

Tips Excess Insurance

Tips Excess Insurance: Having insurance can help reduce the possibility of loss, damage, or loss occurring in an unforeseen event. For everyone who has insurance. There are several deals that have been discuss. However, have you ever felt that you have excess insurance? This can have the effect of wasting too much money, but sometimes many people don’t realize that they have overinsured.

1. Definition of excess insurance

According to the Financial Services Authority (OJK). Excess insurance is a condition carri out for the closure of the insurance in the amount of coverage that is higher than the market value of the insurance object itself.

2. What is excess insurance

In short, over-insurance is an insurance against a particular property that makes the insured buy too much coverage. This results in an excess of the actual cash value as well as the risk or property that has been insur. The existence of customers who carry out excess insurance is referr to as moral hazard risk for insurance companies. Because the insured will have the possibility of making a false claim to get a number of profits for false losses.

The insurance company has made various kinds of protection in order to prevent the occurrence of excess insurance. However. There are several types of coverage such as disability income insurance which is always misus with excessive insurance. This will certainly make the insurance company experience possible losses in the future. And customers will waste too much money just for insurance.

3. Examples of excessive insurance

If you are still having trouble understanding how excess insurance occurs in more detail, here are examples of excess insurance, namely:

For example. You have a car that has been insur for Rp. 3,200 thousand. And then it was written off due to an accident. The assessment of the accident came to the conclusion that the car could be replac with Rp. 160,000
In the end, only Rp. 160,000 was paid by the insurance company. However, you have paid a premium to be able to cover insurance in the amount of Rp. 3,200 thousand, while the premium paid at Rp. 40 thousand is an additional that has been paid for free.

The occurrence of excessive insurance will create risks for the insurance industry, and will cause insurance fraud to become more prevalent. It is possible that the insured who has overpaid insurance may be tempted to cheat. The Insured can make false claims. That way, the insured can profit from the loss.

4. How to prevent excessive insurance

You don’t need to worry, because there are ways to prevent excessive insurance. However, keep in mind that excess insurance is your own responsibility, not the responsibility of the insurer.

You have to make sure that your property is insured for the correct value and is not overcharged. The following are ways to prevent excess insurance, namely:

You must have proactive action towards your insurance and personal financial needs.

Study the terms and conditions of a policy in order to gain a deeper understanding of what an insurance company considers excess insurance.

Conduct a review of the insurance that you use every year, and ask the insurer so that your property is not insured for more than the market value. This has the aim of not buying a cover in excess, but with the right cover and the price is also right.

You should also ask about your financial obligations to the bank, if your vehicle is financed by a financial institution.

You must save the invoice file of the goods you have purchased. However, you must first ask the insurance company about the cost to replace the items you have purchased.

5. Causes of excess insurance

There are 3 main causes of someone who does excess insurance, including:

Chances are you are afraid of experiencing under coverage, so you decide to do more or more insurance than necessary.
Most owners of a property ignore depreciation (costs incurred due to fixed assets) and the decline in the market value of the property.
You should understand that prices can fluctuate over time, as well as the cost of replacing items that have been damaged, lost or stolen.

6. The difference between over-insurance and under-coverage

Through the coverage below, you will be insured at a price less than market value, while excess insurance will insure an amount above market value.
Over-insurance makes you noisy in paying too much premium, especially since the market value of the insured property is less than the insured amount.

That’s a review of excess insurance that you must understand before making insurance for yourself or your property. Through this review, what do you think about excess insurance?