Insurance Academy

You Bought Insurance For What?

By Patrick Wraight | August 22, 2018

Have you ever gotten an email with the subject line “You Need Search and Rescue Insurance”? Yeah. I hadn’t either; until last week. Seems we have an adventurer in our office and he has what he calls search and rescue insurance. This made me think about other unusual insurance policies or coverages. Of course, we have all heard about the unusual and interesting coverages that athletes and other famous people buy. If you’re interested in some unusual coverages, check out this article on MyNewMarkets.com.

Once all the flap about unusual coverages died down a little, I found the “policy” online. What I discovered was really interesting and I thought it would make a fun topic to write about this week.

Not really insurance

Yeah. That’s a little unfortunate, but it’s the truth. Oh, don’t worry, that doesn’t mean that we’re done with it. Technically, it isn’t an insurance policy. This is a paid benefit for members of the organization. Insurance is a contract between two entities where one promises to indemnify the other according to the terms and conditions of the contract and in return for the payment of premium. There’s no contract in place between my coworker and the company.

What’s kind of interesting to me is that there is an insurance contract between the organization and an insurer (Certain Underwriters at Lloyds). So, they do have an insurance policy, written by an underwriting syndicate at Lloyds. That tells us a few things. First, we know that it isn’t a standard policy. Lloyds doesn’t operate in many markets as an admitted market. The second thing that we knew is that the organization is buying insurance based on the benefit level of all purchasers and the number of claims filed in the last few years. It appears to be at least a little profitable for Lloyds because the organization can still offer the membership for $18/year.

So, what’s covered?

The member has to choose whether she will pay for an individual, family, or organizational membership. That’s great if you are part of a family of people who dive for shipwrecks, or if you are a member of an aerobatic organization. When you go on your adventure, if something happens that requires a rescue, you click your button on your qualifying locator device, and wait for help. When help arrives, they will take you to safety. That includes possibly going to a hospital or other medical station. The costs associated with being picked up and delivered to safety are what this benefit covers.

So, what’s excluded?

Of course there are exclusions. It is based on a policy after all. This is kind of a fun part, digging through and finding the holes in the coverage. It turns out that this isn’t for the true global adventurer. There happen to be some places that you can’t go and have coverage. Specifically, there are nine countries (actually eight countries and parts of one other) that you can’t visit and still have coverage. You may have already guessed some of the countries you can’t visit: Afghanistan, Iraq, North Korea, Somalia, and a few others. I know. All the real fun garden spots around the world.

Related to that exclusion is another very interesting exclusion. There is no coverage for kidnap, abduction, or ransom. Let’s make sure we’re clear here. If you get lost, there is coverage. If you are kidnapped, there is no coverage. Why is this related to the location exclusions? Those are areas where a person may be abducted and held for ransom.

It turns out that they have anticipated that some people might be traveling to find medical care for a pre-existing condition; others might be traveling against medical advice; or that some might have pre-existing medical conditions that might make travel dangerous. None of those cases are covered.

By the way, if you’re thinking of doing any mercenary work, that’s not covered, either. Yep, insurance companies do think about the possibility of a modern-day soldier of fortune trying to make a living by helping people wage war around the world. On a side note, I’m pretty sure that there are easier ways to make a living, but to each his own.

It’s also interesting to note that there’s no coverage for people who take unnecessary risks (as defined by the benefit) or who aren’t properly trained for the risks that they undertake. It’s important to note that what you might think is an unnecessary risk, the underwriter might look at as just adventurous for the purpose of this benefit. So if you aren’t an expert spelunker, I wouldn’t recommend this product when you spelunk a cave you’re not qualified to spelunk. Pick a different adventure. Maybe you can learn to skydive, just no BASE jumping on your first go.

Making risky behavior a little less risky

In all, I like this benefit. It has real exclusions and limitations. It has a real benefit, too. I know that if my sons were hiking the high peaks of the Adirondacks, I’d feel a lot better if they had a device that could locate them and bring them to safety. And if something happened they would have money available to pay any fees associated with finding them and bringing them back alive.

Turns out that even the riskiest among us still have a limit to their risk tolerance. My risk tolerance? I drive in Florida. That should say it all.

What’s the weirdest insurance product that you’ve dealt with? Maybe a policy on an “out there” risk, or an insured with unusual exposures that warranted a policy that you’ve never seen before. Tells us about your odd risks. If you can, send me a weird policy. I’d love to write about it.

About Patrick Wraight

Patrick Wraight, CIC, CRM, AU, is director of Insurance Journal's Academy of Insurance. He can be reached at pwraight@ijacademy.com.

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