Insurance lingo is not for everyone. To help, we have compiled a list of common questions and insurance terms.
What is insurance?
Insurance is a risk transfer mechanism that removes the potential cost of loss from individuals or businesses, transferring it to other entities for an amount of money. The underlying principal of insurance is that the premiums of the many, pay for the losses of the few.
What is an insurance broker?
An insurance broker negotiates insurance contracts on behalf of their clients with insurers. They aim to negotiate adequate coverage for their clients’ needs, along with creating value for money through utilising their specific expertise and product knowledge.
What is an insurer/underwriter?
An underwriter is an entity that takes on the risk for a cost, and subsequently pays out claims in the event of a loss.
What is the Lloyd’s insurance market?
The Lloyd’s insurance market is the oldest international insurance market, supporting individuals and businesses globally. Lloyd’s has a rich history in being instrumental in the rise of the aviation, marine, oil and gas and many other industries. The strength of this market comes from its globally diverse portfolio of risk, thereby not leaving itself too exposed to any single geographical location. Lloyd’s supports a global network of brokers that feed clients into its Lloyd’s insurance brokers, which in turn trade risk in the market.
What is a policy limit?
A policy limit is the maximum amount an underwriter will pay in the event of any one claim. A policy limit does not limit the amount of claims that can be paid out under a policy and should not to be confused with an aggregate.
What is a policy ‘excess’?
An excess is the amount you have to pay in the event of an insurance claim.
What is an aggregate?
An aggregate is the maximum amount that an insurance policy will pay out within its policy period.
Does a homeowner’s insurance cover sharing economy activities?
Homeowners’ buildings and contents insurance policies will often not cover short term lets and paying guests.
In the event of a loss, what happens if a host does not have adequate insurance cover?
If a host’s home insurance policy does not respond to a claim brought about by a commercial activity, then the homeowner will be at their own financial risk. In the case of minor losses, this can be an inconvenience. However, with catastrophic events, this can leave the homeowner exposed to the loss of their largest financial assets.
Why should a sharing economy platform offer insurance?
Imagine your worst PR nightmare: a home let through your platform has a party take place, the house is trashed and furthermore, a fire has started. This destroys the house but worse, the fire spreads to surrounding properties. Who pays for these losses? Is it the guest, the platform or the homeowner? Who has the most to lose? Clearly the reputational damage to the platform can be catastrophic. The homeowner can be left significantly out of pocket and even worse, out of home all as a result of the lack of cover offered by household insurance policies. SafeShare have developed products to make sure your homeowners are protected. This boost’s the eco-system for trust and security, and results in a sustainable business model for all involved.
Why aren’t there more insurance products for the sharing economy?
The sharing economy has brought about a significant challenge for the insurance industry to create new, flexible products with global reach. The insurance market often takes time to adapt and create relevant products to changes in industry, and shifts in cultural behaviour. This lag is often driven by a lack of data. Furthermore, solutions have often been limited at national level.
There are a number of insurance products available for sharing economy platforms. We have answered some common questions relating to why SafeShare’s products are more robust compared to other products out there.
What is an umbrella policy?
This type of policy is taken out by a platform to cover against catastrophic events for their participants.
What are the draw backs of an umbrella policy?
- These types of policies can leave the platform’s balance sheet exposed to high excesses, with a possible obligation to make up the excess for the client.
- These policies often have an ‘aggregate’, which means that the policy will only pay out up to a fixed amount, for example £2m, in any single year. If further claims are to arise, this can leave your other clients without insurance cover.
- These polices can create conflict, in that it will often be stipulated that the client should first attempt to claim with their own existing insurance. Moreover, it can be unclear as to which policy should be claimed on, due to a potential overlap in (or lack of) cover. The platform will often be responsible for negotiating loss settlements in these instances and so can be the bearer of bad news.
What is a ‘guest liability’/ travel cover?
This is an insurance policy that covers guests for damage to property including injury to other people whilst staying at the host’s home. Whilst this is beneficial for the guest, this is no substitute for an insurance policy that the homeowner can control.
What are the draw backs of a ‘guest liability’ / travel cover?
- This policy does not cover the homeowner, in case the guest injuries themselves.
- There has to be proof the guest caused the loss to settle any claim.
- There are losses that can occur during a booking that might not be the guests fault and could still result in the homeowners own insurance policy not paying the claim.
- The guest will always have the option not to take out this insurance, which means there could be no insurance cover at all.
Why SafeShare Host Home protection?
Our aim is to protect all parties involved in the sharing economy, especially the ones with the most to lose. When it comes to home sharing, our host home protection product is there to protect the homeowner. The homeowner is often putting their largest asset at risk by not having adequate insurance. Our products cover Buildings, Contents and Public Liability. This comprehensive package will leave both the guest and host with peace of mind.
Highlights and benefits
- Hosts can opt-in to the cover on an affordable pay-as-you-use basis.
- Unlike other products on the market the Host has the right to claim, with access to a 24 hour hotline.
- This policy will not create conflict with the Host’s existing insurance cover.
- Our product does not have a policy aggregate.
|SafeShare||Umbrella Cover||Guest Liability/Travel Cover|
|No conflict with existing Host insurance||✔||✕||✔|
|Host opt-in to cover||✔||✕||✕|
|Host direct access to claims||✔||✕||✕|
|Full cover for the Host||✔||✕||✕|
|Covers the Host in the event of injury to the Guest||✔||✔||✕|
|Covers property damage caused by the guest||✔||✔||✔|
|Covers damages during the Guest’s stay but not caused by the Guest||✔||✕||✕|
Frequently Asked Questions February 10th, 2021oneriseeast