Cover Advantage Endorsement is a policy feature developed by MECON, which allows you to remove some exclusions from your policy that would otherwise mean your claim would be reduced or rejected. An Australian first, this innovative feature boosts the potential value of your insurance – and provides greater certainty for you and your client’s business.
Why MECON developed the Cover Advantage Endorsement
In regards to how this offering came about, MECON CEO Glenn Ross said, “We looked at what the pain points were for our clients, and one of the clear themes was around things that were excluded from policy cover. Whenever you have an exclusion, you’re disappointing a client by saying ‘Sorry, we don’t cover that’ and potentially damaging relationships.
“Innovation is a cornerstone of our business – we’re constantly striving for it for our insureds so we looked at whether there was anything new or different we could do in this space.
“Basically, we looked at the common exclusions, and considered whether we could do something to mitigate or remove them. And that’s how we came up with the Cover Advantage Endorsement.”
An endorsement tailored to the SME market
MECON Insurance introduced the Cover Advantage Endorsement nearly seven years ago. Cover Advantage Endorsement helps to fill a niche, specifically for the SME market.
“It’s designed to provide cover for up to $500,000, which typically covers the majority of claims in the SME space, and it’s balanced with higher deductibles. It’s an innovation, as far as I’m aware, that is unique to everywhere, not just Australia,” adds Ross.
As the brochure here indicates, the Cover Advantage Endorsement covers exclusions in both material damage and public liability coverage. The big ticket items are the defective material workmanship and design and damage to product. These are the ones claimed on most prevalently.
Take up and feedback on the Cover Advantage Endorsement
In regards to take up of the endorsement, Ross says, “We’re in a market where people are watching their spend, but for some things you need quality and this is one of those things. It provides quality cover and peace of mind.
“Particularly with the clients who’ve had claims, and the brokers who understand risk, they would never be without it.”
The endorsement promotes an alignment of the client and the underwriter’s thinking before payment is made, making it quite a robust process when it comes to a faulty design issue, what it requires is that your thought with your insured is aligned. They can challenge the policy, they can say it’s not faulty or defective and run the policy to the full sum insured. But once they do align with your thinking on it (which they will invariably do), then they can access the cover. If it’s designed by a third party, we can recover the excess. So sometimes when it’s high, we will get it back for our client often.
Here’s an example of how Cover Advantage Endorsement could help:
Steve, a builder in a small construction firm, completed laying a concrete slab for a commercial building. The slab, which was worth $60,000, was found to have cracks across it. Steve assumed that the cracks were probably the result of either defective workmanship, materials or specification, which weren’t covered by his insurance policy, so he decided not to submit a claim.
Steve and his team then removed the slab and checked the original specification criteria, then re-laid the slab. Again, the slab formed a substantial number of cracks after it was completed. The cracking meant that Steve was set to lose at least another $60,000 – a total of $120,000. However, this time, Steve submitted a claim to MECON.
Steve’s claim was investigated, and the cause of the cracking both times was found to be an error in the specification of the concrete supplied by the batching plant. This normally wouldn’t be covered by construction policies, which exclude defective materials, workmanship or design.
However, Steve chose MECON’s Cover Advantage Endorsement option and the defective materials, workmanship or design exclusion was removed. This meant that Steve only had to pay an excess of $15,000 for each loss, claiming the remaining circa $45,000 for each loss event – a total of circa $90,000.
Without the Cover Advantage Endorsement claim, Steve’s claim would have been denied – as it would under many other policies on the market.