Life moves at a rapid pace and an accident involving a third party can happen at any time. If you do not have third party liability insurance, a major liability claim can jeopardize the financial security of your family for the rest of your life. Understanding how the financials of personal liability insurance work will enable you to choose the best package for your family. We will start with the amount you should be insured for. What is the amount you should be covered for? The most common options are: ● CHF 5 million. ● CHF 10 million. Today fewer and fewer insurance companies offer liability insurance at less than CHF 5 million. This might seem like a large amount, but if you consider that liability insurance will pay for the reconstruction of part of a building that you could accidently set on fire or the medical expenses and loss of income of a person you might injure, it is understandable. As there is only a small difference in premium (CHF10- to 15.- per year) between the low 3ml (when it is available) and common 5mlcoverage it is highly recommended to opt for the higher 5ml coverage. The extra 2ml could make all the difference in the event of a major third party liability claim. How is the Amount of the Compensation You Receive Calculated When You Make a Swiss Personal Liability Insurance Claim?
Liability claims are compensated with an actual value calculation rather than with a more standard replacement value calculation. The actual value of any product is its value less depreciation and wear and tear. Insurance companies generally depreciate an item by 10% per year if it has “normal” wear and tear, and possibly more if it has been poorly looked after. For example, if you break someone’s expensive vase which the third party bought for CHF 2’000.- five years previously the insurance company will estimate its current value to be CHF 1000.- The vase has lost 50% of its value, because the insurance company has depreciated it by 50% (10% per year over a five year period). This is why specialists always recommend taking out extended all risk coverage on your contents or personal belongings insurance policy, as the latter compensates with a replacement value calculation. In the event of injury inflicted on a third party the insurance company will fully compensate the medical expenses and any loss of income costs the injured person suffers. If someone wrongly accuses you for third party damage or injury and takes the matter to court, your Swiss personal liability insurance will compensate all of the related legal costs required to prove your innocence. Gross Negligence and the Deductible Two other factors that influence the compensation you receive following a liability claim are the deductible you choose and the insurance concept of gross negligence. ● The deductible is the amount of money you have to pay out of pocket before your insurance starts to pay in the event of a claim. For the below example, let’s imagine you have chosen a deductible of CHF 500.- You accidentally break a third party’s phone which costs 600.- You will have to pay 500.- out of pocket and on condition that the phone is less than one year old the insurance company will pay the remaining CHF 100.- If the phone is two years old the actual value calculation will depreciate it by CHF 120.- (20% of 600), so you will receive 0.- in compensation. For this reason specialists always recommend a 0.- deductible on Swiss liability insurance policies. ● Each person is expected to respect the fundamental principles of safety and common sense at all times to safeguard their own security and the security of those around them. If you make an insurance claim and the insurance company considers that you did not respect these fundamentals they can claim gross negligence. Imagine that you break an item that belongs to another person by stepping on it. You can make a liability claim because you damaged third party property. But because the item was on the floor the insurance company will claim gross negligence, giving them the right to only partially compensate the claim. It was negligent of the owner of the item to leave it on the floor, so they did not respect the fundamental principles of safety and common sense. An excellent extended insurance module will protect the policyholder from the insurance company’s right to plead gross negligence, always make sure that the gross negligence waiver is included in your insurance package. Insurance companies reserve their right to not compensate claims caused by gross negligence following the use of drugs or alcohol. Consult Charles McHugo, the Expat Experts certified insurance specialist on +41 78 601 40 90 to help you choose the most adequate Swiss liability insurance policy.
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