Insurance policies often contain technical terms and specific conditions that can raise questions. Understanding how cover works, how claims are handled, and what responsibilities apply to policyholders helps ensure that insurance performs as expected when it is needed most.
The answers below address some of the most common questions relating to insurance cover, claims procedures, and policy requirements.
An excess is the portion of a claim that remains the responsibility of the policyholder. It represents the first amount payable when a claim is submitted and applies regardless of whether the insured party was responsible for the incident.
The purpose of an excess is to discourage minor or unnecessary claims and to help maintain stable premium levels.
An Excess Waiver allows the basic excess on a claim to be waived under certain conditions as specified in the policy schedule. Additional excess amounts listed in the policy may still apply.
This benefit is generally limited to the insured person and their spouse.
Insurable interest means that the policyholder must have a financial interest in the item being insured. In other words, the insured must suffer a financial loss if the item is damaged, destroyed, or stolen.
Items belonging to another person generally cannot be insured unless a financial interest in that item exists and has been disclosed to the insurer.
Fraudulent claims are treated very seriously. If any part of a claim is found to be fraudulent, the claim may be rejected and legal action may be taken against the person submitting the claim.
Submitting accurate and honest information is essential throughout the claims process.
Claims may be declined for several reasons, including:
• Non-payment of premiums
• Non-disclosure of important information
• Failure to meet policy security requirements
• Lack of proof of ownership
• Driving under the influence of alcohol or drugs
• Insuring items without a financial interest
Understanding policy terms and maintaining accurate information helps reduce the likelihood of claims being declined.
Recovery timelines vary depending on the circumstances of the incident, the availability of information relating to the other party, and the level of cooperation received during the process.
Recovery may take several months and in some cases longer depending on legal processes involved.
The insured is the individual named in the policy schedule. In most cases, this includes their spouse and family members who normally reside with them and are financially dependent on them.
Average applies when the insured value of property or contents is lower than the actual replacement value. If a property is underinsured at the time of a claim, the insurer may only pay a proportional portion of the loss.
Ensuring that buildings and household contents are insured at their correct replacement value helps prevent the application of average.
The incident should be reported to your insurer as soon as reasonably possible. If another party is involved, details of the vehicle, driver, and insurance information should be recorded where possible.
It is important not to admit fault or make statements regarding responsibility until the matter has been formally assessed.
Claims may be rejected if an accident occurs while the driver is under the influence of alcohol or drugs, or if the driver’s blood alcohol level exceeds the legal limit.
Recovery occurs when the insurer attempts to recover the cost of a claim from a third party who was responsible for the loss. This process may include recovery of the claim payment and the excess amount paid by the insured.
A recovery occurs when the insurer pursues another party who was responsible for the damage.
A third-party claim arises when another party claims damages against you following an incident where you may have been responsible.
If the insurer successfully recovers the claim costs from the responsible third party, the excess paid by the policyholder may also be recovered. However, recovery of the excess cannot always be guaranteed.
Understanding insurance policies and claims procedures is important in ensuring that cover performs as expected when it is needed.
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Staying informed helps ensure your insurance protection remains aligned with today’s realities.
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