Get Insured: general insurance, read one clause at a time

Schedule

Six sections, in the order a policy is lived

From the documents you read before you buy, through the amount you insure for, to a claim and what happens if you and the insurer disagree.

Section 1
Reading a product disclosure statement
What a PDS has to contain, and the questions Moneysmart suggests asking of it.
Section 2
Sum insured and underinsurance
How a cover amount that is too low can shrink a small claim as well as a total loss.
Section 3
Key facts sheets
The government-set summary for home building and home contents policies.
Section 4
The General Insurance Code of Practice
What insurers that adopt the Code commit to, what it leaves out, and who enforces it.
Section 5
Making a claim
The steps, and the timeframes the Code sets for each of them.
Section 6
When you disagree with an insurer
A complaint to the insurer first, then the Australian Financial Complaints Authority.

Under the loupe

Three passages, quoted as written, then read plainly

The small type on the left is copied from the source. The loupe on the right is our plain reading of it.

Insurance Contracts Regulations 2017, section 34(1)

“flood means the covering of normally dry land by water that has escaped or been released from the normal confines of any of the following: (a) a lake (whether or not it has been altered or modified); (b) a river (whether or not it has been altered or modified); (c) a creek (whether or not it has been altered or modified); (d) another natural watercourse (whether or not it has been altered or modified); (e) a reservoir; (f) a canal; (g) a dam.”

Read plainly

Home and contents policies share one meaning of flood: water escaping a lake, river, creek, watercourse, reservoir, canal or dam onto normally dry land.

General Insurance Code of Practice, part 8: claim decision

Under the Code, the insurer will decide your claim within 4 months of receiving it, unless paragraph 78 applies. If it has not decided by then, it will tell you in writing about its complaints process.

Read plainly

Outside a short list of exceptions, an insurer that has adopted the Code decides a claim within four months, or tells you in writing how to complain.

Moneysmart, Home underinsurance

Moneysmart explains that a coinsurance or averaging clause caps what the insurer pays on a claim at the share of the replacement value you insured. The cap reaches every claim under the policy, not only a total loss or a full rebuild.

Read plainly

In Moneysmart’s example, a home insured for two-thirds of its rebuild cost has a $15,000 garage repair paid at $10,000.

Each passage has a fuller reading: flood and the other defined events in reading a PDS, the four months in making a claim, and the garage in sum insured and underinsurance.

Definitions

Words that carry the weight

Insurance documents use ordinary words in particular ways. These are Moneysmart’s meanings, shortened.

Policy: The agreement between you and the insurance company.
Premium: What you pay for the policy. It could be quoted as a yearly, monthly or quarterly amount.
Excess: The amount of a claim you pay yourself, set out in the policy.
Exclusion: Something the policy does not cover.
Sum insured: A set amount of cover, as against “total replacement”, which is the full rebuild cost.
Product disclosure statement: The document a provider must give you when it recommends or offers a financial product, covering its key features, fees, benefits, risks and complaints procedure.
Cash settlement: An agreed amount the insurer pays instead of arranging repairs or replacing damaged items.

Where to check

The official places behind this guide

Moneysmart’s insurance pages, a Federal Government website brought to you by ASIC, the financial services regulator.
The General Insurance Code of Practice, published in full by the Insurance Council of Australia, which introduced it in 1994.
The Australian Financial Complaints Authority, which Moneysmart lists as the external scheme for complaints about insurance.
The Insurance Contracts Regulations 2017 on the Federal Register of Legislation, where the standard meaning of flood and the rules for key facts sheets are written.
The Insurance Council’s home and contents calculators, which Moneysmart suggests as a place to start estimating a sum insured.

About

About this guide

getinsured.com.au is a guide to reading general insurance, published by Dotto. It explains the documents and the rules in plain words, with the official source for each fact linked beside it.

It is general information, not financial advice. It doesn’t know your situation, and it doesn’t compare, name or rank insurers or policies. Health, life and funeral cover are outside it. Your own policy documents set out what your cover says.