Automatic Cover for New Risks (AHB)

Purpose

Under AHB clause 3.1 (3) together with clause 4, risks that arise for the policyholder only after the contract was concluded – for example through business expansion or a new operational activity – are automatically and provisionally covered under the existing policy from the moment they arise. This automatic cover prevents a business from being left uninsured during the period between a new risk emerging and its formal incorporation into the contract.

Effect and limits

The policyholder must notify the insurer of the new risk within one month of a corresponding request; late notification results in retroactive loss of cover for that risk. Until agreement is reached on the additional premium, cover is also capped at interim sums stated in the policy. Expressly excluded remain risks arising from vehicles subject to registration or compulsory insurance, railway operations, short-term arrangements of under a year, and, in personal liability cover, business, professional or official activities.

Negotiation and practice

For growing businesses and when entering new lines of activity, automatic cover for new risks provides important transitional protection but does not replace a timely, clean policy amendment. Brokers should establish internal notification processes so new risks are reported within the deadline, and should periodically review whether the provisional interim sums are adequate relative to the actual new exposure.