You agree that an insurance policy is a contract between you and the
insurer? Right, then you will also agree with me that a policy contains the
terms and conditions of your cover (it’s called the policy wording). Within
a commercial insurance policy wording are certain “clauses” and
“extensions”. And you need to be aware of them!
To begin with let’s have a look at the legal definition of a “clause”. Its a
section, phrase, paragraph or segment of a legal document that relates to a
So because insurance is a legal document with lots and lots of wording you
are bound to find a number of “clauses.” Let’s now have a look at a “clause”
in the context of actual commercial insurance policy wording to highlight
the point I’m trying to make.
For the purpose of this blog post I’ve used the Santam commercial policy
Under the Fire Section of the policy is the following clause.
Fire Extinguishing Charges Clause – it reads as follows
Any costs relating to the extinguishing or fighting of fire, shall be deemed
to be damage to the insured property and shall be payable in addition to any
other payment for which the company may be liable in terms of this section
provided the insured is legally liable for such costs and the insured
property was in danger from the fire.
So, the “clause” – which we’ve established is a segment of legal wording
which highlights a particular point is in fact doing just that. In this
particular instance its highlighting the fact that should you incur costs
fighting a fire it will be paid by the insurer.
So if you see a “clause” within your policy document it’s your insurer
trying to highlight a particular point. And if they’ve taken the time to
point something out, it’s important. Take note!
Next question. “Why do I see the word extension all over the policy
Again, let’s start with the definition of the word “extension”.
It means – the amount, degree or range to which something is extended and in
the context of insurance it’s referring to an extension of your coverage.
Extensions to a policy widen the scope of cover and are usually free of
Again let’s have a look at the Fire Section of the Santam commercial
Your base line coverage includes. Damage to your property as a result of
2. Lightning or Thunderbolt
But, the cover can extend to include other special perils under the “Special
Perils Extension”. It is a furthering of your cover. Those perils are:
Damaged caused by:
1. Storm, Wind, Water, Hail or Snow
2. Aircraft and other aerial devices or articles dropped therefrom 3. Impact
by animals, trees, aerials,satellite dishes or vehicles.
To wrap up. A “clause” within your policy document is a segment of wording
highlighting a particular important point. An “extension” is what the name
suggests. It’s an extension of your cover.
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Until next time.
The InsuranceFundi Team