If you’re spending thousands on insurance, it’s important that you understand what is required from you, what your policy covers and under which circumstances your insurer will ‘come to the rescue’.
Unfortunately understanding your policy is no easy task – Insurance policies are loaded with confusing terminology and perplexing clauses. At Nepean Brokers we believe consumers can only make informed insurance decisions when they completely understand their policies. Our eBook provides detailed examples and clear definitions to help you understand what is what.
A ‘third party’ is a natural person or legal entity that is separate from the first two parties, typically to a contract at law.
Examples of third parties include financiers who are funding a transaction, the mortgagee to a home, a landlord or a government department awarding a tender.
In the event of a general insurance claim, the insurer who issues the policy may seek to exercise their ‘right of subrogation’. This is where the insurer take the legal place of the policyholder in recovering costs from a third party.
For example, if you were to have a car accident, your insurer might pay you according to the terms of your policy, but then choose to exercise their right of subrogation against the insurer of the other car, who is at fault.
Claims Made Policies
A claims made policy requires that claims be made only during the policy period, and cannot be made after the policy has ceased to exist. Moreover, once a claims made policy expires, it expires for good. A fresh policy must be arranged at the end of the policy period
Co-insurance essentially means that the policy-holder bears the responsibility of ensuring that the property being insured is not insured for a value less than a pre-determined percentage value of the true replacement value of the property.
Up to 70% of property insured in the market may be subject to a co-insurance adjustment in the event of a claim – so it’s important to understand how the co-insurance clause might affect you.
Duty of Disclosure
As a policyholder, you have a duty to tell your insurer everything that you know (or should know) that is relevant to the insurer’s decision to provide insurance to you or anyone under the policy. This information can affect the amount of your premium, the success of your request for insurance and if special considerations will apply to your policy.
Understanding this information arms you with the knowledge to make better insurance decisions. For more details and examples of these terms, download our eBook here.