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Transit Insurance

23rd September 1938
Page 57
Page 57, 23rd September 1938 — Transit Insurance
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Which of the following most accurately describes the problem?

Notes—EXCESSES

ONE clause in his transit policy which, more than any other, often annoys a haulage contractor is the excess clause, which states that he must bear a fixed sum of each and every claim himself and that the insurance company will pay only " in excess of " that sum. But, although this clause may at first sight appear unjust, it is actually of direct benefit to all concerned.

Perhaps, the main benefit is that the imposition of suitable but not onerous excesses results in premiums being maintained at their present levels—levels which, incidentally, are lower than ever before. But, if the excesses be removed, it is obvious that premiums woluld have to be increased most drastically so as to allow for the flood of petty claims with which the insurance companies would have to deal. Whilst there is no reason why such companies should not deal with small claims, as well as large ones, it will be realized that even the cost of correspondence to and fro would add enormously to the expense of the claims themselves. In other words, a great mast of entirely unnecessary clerical work would have to be paid for and the people who would pay would be the hauliers.

In a different class comes the haulier who is forced to bear a far higher excess than normal owing to an unfortunate series of claims. Such an excess is not merely a penalty, but is really a corrective, which is usually removed just as soon as it has served its purpose of making a haulier more careful than he may have been in the past. Although this may seem hard at the time to the individual concerned, the ultimate result is almost always beneficial—just another version of "being cruel to be kind."

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