After a fire, flood, burglary, earthquake or other such event, there is obvious destruction, loss or damage to buildings, plant and stock. This physical loss or damage is commonly insured under a Material Damage policy.
The purpose of Material Damage insurance is to reinstate the asset lost or damaged, as it was if no fire or other insured event had occurred. The insured may elect not to reinstate and can negotiate a financial settlement, which would reflect a depreciated reinstatement value. However the insurer is not liable under the policy unless the property is insured property and the insurer has accepted a valid claim for the damage.
Material Damage Insurance is the modern form of the fire & perils insurance. It is superior because of its broadness of coverage, meaning that if it is not excluded then it is covered. The policy also provides accidental type coverage and is adaptable to extend and limit coverage as required.
Three of the common extensions to a Material Damage policy are:
- Electric Current Damage
Three common exclusions to a Material Damage policy are:
- Electronic Data
- Building Defects
Theft is another common exclusion however this cover is included in the Marsh agreed wording.
Material Damage insurance is subject to a deductible. This means that before the policy will respond the loss must exceed a pre-agreed amount. The standard deductible is $500 however this will vary between policies and insurers for a number of reasons:
- Previous claims experience
- Business activities
- Building construction/location
A customer may also elect to take a higher deductible to achieve a premium discount.
Marsh has an agreed combined Material Damage and Business Interruption wording with all insurers in the New Zealand insurance market.