Why do you need to read the PDS when effecting insurance?
Insurance providers are required to give their clients a PDS (Product Disclosure Statement) that details the terms and conditions of the policy. The PDS contains all the relevant policy terms and conditions that will dictate the effectiveness and outcomes of the policy you have purchased. It is a legal document, and you are likely not to disregard any other legal document if it was provided to you, which entitled you to settlement benefits.
It can sometimes be a difficult task to read and understand a PDS. Although many are said to be in ‘plain English’, most are filled with industry jargon and technical concepts. Even when comparing different policies, terms and definitions may slightly differ leading to a different outcome. Subsequently, it’s important to know what is and isn’t covered in the policy and under what circumstances a future claim might be declined.
Coverage, limits & exclusions
Make sure you are aware and understand what is and isn’t covered under the policy, as well as any circumstances when your items will not be covered. Also, look for items that are excluded under the policy and any limits usually called sub limits, on the dollar values that can be claimed for specific items. Be aware of matters such as ‘Under or Co Insurance’, also called ‘Average’. Such conditions can limit settlements, even for insured events.
Making a claim
The PDS also outlines the conditions and steps necessary to make a claim against the policy, as well as what documentation or evidence you might need and the amount of excess you will be required to pay for each claim. It is important to follow these steps to be in accordance with the Insurer’s requirements so as to not potentially prejudice any claim being settled in accordance with the policy’s coverage.
What can void your policy?
It’s important that you understand any circumstances that could void your policy and any information that needs to be updated with your insurance provider. For example, if you no longer keep your vehicle in a locked garage overnight, but now park it on the side of the road and it’s stolen, not informing your provider of this change can potentially cause your claim to be denied. Such matters are referred to as misrepresentation or non-disclosure; matters that increase the insurers risk need to be declared.
The issues are that PDS documents, whilst outlining the full terms and conditions, do form a legal binding contract, so it is important to ensure you have the right cover for your identified exposures as well as following any steps and procedures when making a claim or if your risk exposures change.
Lewis Insurance Services is here to help our clients with any queries they may have about their policies and information in the PDS. To discuss further, please contact Lewis Insurance Services on 07 3217 9015 or send us an email by clicking here.
This article was published by our AFSL Licensee, Insurance Advisernet Australia P/L (12/10/2018)
This information and any accompanying material does not consider your personal circumstances as it is of a general nature only. You should not act on the information provided without first obtaining professional financial advice specific to your circumstances and considering the Product Disclosure Statement.