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Making your windfall last longer Here are some tips on how you can make a financial windfall like a tax refund, inheritance or redundancy payment last longer. |
| How insurance works Insurance policies involve the transfer of risk. The insurer agrees to compensate you for a loss rather than you having to pay for that loss yourself. Usually the insurer assesses whether to accept the risk (and if so, on what terms) through information they get from you. You decide whether the terms the insurer offers meet your needs. Read the product disclosure statement to help you with this. You and your insurer both have a role in making sure your insurance contract works. In this section, we talk about: What you must do Know what the policy covers (and what it doesn't) before you sign Most people only read their policy from cover to cover when they need to make a claim. Unfortunately, by this time it's often too late. Disputes about unpaid insurance claims go to a body called the Insurance Ombudsman Service Limited. Analysis of disputes about claims in 2006 showed that 72% of people did not have the insurance cover they thought they did. Analysis of the table below shows why they lacked cover. 100% disputed claims (reported) Result of investigation:
Tell it like it is It is very important that you answer all questions the insurer asks you as accurately and completely as possible. This is called your "duty of disclosure". If you do not answer them properly, you may have misled the insurer about the risk they are accepting. As a result, the insurer may be entitled to refuse to pay any claim you make. (This was the case in 6% of disputes that went to the IOS in 2006). The insurer does not usually check the accuracy of the information you provide, but relies on the truthfulness of your statements in deciding whether or not to give you insurance. These statements may only be checked when you make a claim. If the statements are incorrect (even if this was unintentional), the insurer may be entitled to reject your claim. Most problems of this type involve car insurance or income protection, so be especially careful when filling out an application for these types of insurance. For more tips, see "Applying for a policy" to insure your: TIP! If your policy is renewed each year (as happens with home and car insurance), you will also need to tell the insurer any changes since the policy was taken out: see Renewing your policy. What the insurer must do Tell you about the terms of the policy The law says that an insurer must "clearly inform" you of the restrictions in the insurance policy before you enter into the contract. The insurer may have failed to clearly inform you of the policy's cover if:
If this is the case, the insurer is penalised. The penalty is that the contract will have terms set by law (which are usually more generous and less restrictive than those in the policy document). That is to say, you may have the right to claim a greater amount than the contract allows, or to claim where the contract does not allow it.
Tell you when your policy is expiring
Using an insurance broker or agent All insurance brokers and agents in Australia must either hold an Australian financial services (AFS) licence or be an employee or authorised representative of a licence holder. This ensures that they:
When an insurance broker or agent first has contact with you, they should provide you with a financial services guide and a statement of advice and copies of the product disclosure statements for any insurance policies that they recommend to you. See also
Your policy documents Usually there are two separate parts to your insurance policy:
TIPS! Keep your policy documents in a safe place so you can easily find them if you ever need to check your cover or make a claim. More about: | |||||
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