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A product disclosure statement, or PDS, is the detailed document behind an insurance policy, and the place Moneysmart sends you to find what is and isn’t covered. Providers must give you one when they recommend or offer a financial product.
General information, not financial advice. For the official guide, see Moneysmart’s insurance pages; for what your own cover says, your own PDS.
What it is
A quote tells you what a policy costs. The PDS tells you what you are buying. Moneysmart’s definition sets out what it has to hold.
Moneysmart glossary: product disclosure statement
In Moneysmart’s definition, a PDS is the document a financial service provider must give you when it recommends or offers you a financial product. It has to cover the product’s “key features, fees, commissions, benefits, risks” and how complaints are handled.
Read plainly
When a provider offers or recommends a product, you’re owed a document naming its features, fees, benefits, risks and complaints process.
For home and contents insurance there is also a shorter, government-formatted summary called a key facts sheet. Moneysmart puts the two side by side: the key facts sheet helps you compare policies, and the PDS is where you read the detail of what’s covered. The summary has its own section.
If you already hold a policy, the General Insurance Code of Practice says that, at your request, an insurer that has adopted it must give you free of charge the information it relied on in assessing your application or handling your claim, and that this can include copies of your PDS.
A reading order
Moneysmart’s guide to choosing home insurance frames the reading as a set of questions. This page borrows their order.
Check how the insurer defines the thing insured. Moneysmart’s examples: a policy might cover an inground pool and not an above-ground one, and might usually cover a granny flat, but not once you rent it out. For contents, floor rugs may be covered but floorboards may not be.
The insurer gives a summary of insured events, such as flood, storm, theft, fire, lightning, earthquake and malicious damage. Each of those words has a meaning in the policy, and flood also has a meaning set in law. The table below has examples.
Some policies include benefits such as debris removal, temporary accommodation and emergency storage of contents. Others let you add cover, such as accidental damage or motor burnout, at extra cost.
These are the exclusions, and Moneysmart notes you may need to read the PDS to find them. Its examples for home insurance include damage caused by the sea, smoke, landslides or power failures. For travel insurance, it lists exclusions that often apply, including “high risk” activities, pre-existing medical conditions and travel to areas under an official warning.
Most contents policies cap what you can claim for certain items. Moneysmart’s illustration: with a $1,000 limit on electrical appliances, a $2,000 television destroyed by fire leaves you paying the difference. The excess is the amount of a claim you pay yourself, and it is specified in the policy.
Definitions
A selection of terms Moneysmart singles out, with what it says about each.
| Term | What Moneysmart says |
|---|---|
| Flood | There’s a standard definition for home and contents insurance: water escaping the normal confines of a lake, river, creek or other natural watercourse, or a reservoir, canal or dam, onto normally dry land. The law sets the same meaning. |
| Rainwater | Usually defined as water that falls from the sky. Storm cover usually includes run-off that collects in normally dry areas and water overflowing from stormwater drains. |
| Fire | Generally a flame has to cause the damage, so heat damage such as scorching and melting, and smoke, ash and soot damage, may not be covered. |
| Contents | Generally items not permanently attached to the home. Pot plants might be covered but garden plants might not be. |
| Agreed value and market value | In comprehensive car insurance, agreed value is a fixed amount decided by you and the insurer, which may be reduced each year. Market value is decided by the insurer, based on industry information. |
| Unattended | Loss or theft of unattended luggage is a common travel exclusion, so check the insurer’s definition of “unattended”. |
Moneysmart lists common exclusions from fire cover too, among them a bushfire that occurs less than 72 hours after you bought the policy.
When buying
Insurers that have adopted the General Insurance Code of Practice say, in its part on buying insurance, that they will take reasonable steps to make their communications plain language, and that pressure selling of their products is prohibited. The Code itself is read in section 4.
Moneysmart adds one caution about comparing: comparison websites can be useful, but they are businesses that may make money through promoted links, and they may not cover all your options.