Although many people may not realise it, the process of choosing a preferred insurance provider doesn’t end when you sign a policy.
Although many people may not realise it, the process of choosing a preferred insurance provider doesn’t end when you sign a policy. While insurance provides an effective safety net for when life delivers the unexpected, it also involves an undertaking by the client to do everything they can to mitigate risks and understand their responsibilities in doing so. To best achieve this in 2024, consumers should have a clear understanding how their policy works.
In terms of educating yourself on how an insurance policy works and what it covers, there is so much more to understand beyond the cover amount and your monthly premium. Working through a policy document meticulously and making sure you understand the terms and conditions is an essential step in continually managing risk and protecting the ever-evolving assets that you work so hard to acquire.
The starting point for understanding the insurance product you’ve selected, is to read the policy document thoroughly. It may be helpful to read through it with a highlighter or pen on hand to underline or circle the terms or conditions that you may not fully understand. This is particularly important, especially for those individuals who may not fully understand aspects such as how excess works, what exclusions are, how valuations work and what ‘wear and tear’ means in the context of their specific insured asset.
One could simply Google these terms to gain a better understanding of them. However, these terms may be slightly nuanced in how they are defined from insurer to insurer and on a client-by-client basis. For example, the amount of excess payable by the insured will differ from policy-to-policy.
Likewise, certain policies may only remain in effect if specific conditions are met, such as the full functionality of a home security system. This too will be different depending on the client and their respective risk profile, which is why working with a broker who is familiar with the details pertaining to that specific policy can prove invaluable long-term.
Just as you would with your General Practitioner from a health perspective, one of the best practices for financial wellbeing is to do an annual or regular policy check-up. This should be done at least once a year, given that there are a number of lifestyle changes and events that could alter the amount or type of coverage a client needs.
For example, upgrading from a 65-inch TV to a 75-inch TV may seem like a small upgrade in size, but depending on the model and brand, this could mean a difference in value. In terms of home contents insurance, not adjusting the replacement value on the policy to reflect the higher value, would automatically mean becoming under-insured. In the event of a home burglary or accidental damage for instance, the person would not be able to claim for the TV’s full value and would have to pay the difference out of their own pocket. When trying to recover from untimely events such as these, the costs could really start adding up.
Furthermore, renovations and upgrades to a property can also affect its replacement value. The past few years for example, has seen many homeowners install solar panels on their roofs. In this case, adding solar technology to a home can significantly increase its replacement value, the policy would need to be adjusted accordingly and additional clauses may need to be added.
Likewise, when it comes to car insurance, any modifications or upgrades performed on a vehicle could also necessitate the adding of special clauses to a policy or adjustments to the level of cover. For example, if a vehicle owner decides to replace the standard factory wheels with expensive aftermarket alloy wheels, the replacement cost of the car would increase.
An annual check-up on your insurance policies will therefore go a long way in preventing pitfalls like becoming underinsured or not fully understanding your responsibilities in preventing unnecessary losses.
Consumers should continually ask questions when it comes to claim processes. In the event of a motor vehicle accident for example, evidence such as accident scene photos and eye-witness reports may be incredibly useful in making the process hassle-free.
It's important that insured individuals are fully aware that the flow of the claims process may work differently from case-to case. In some scenarios, the insurer may deem it necessary to appoint a damage assessor, a claims verifier or an external specialist or service provider to look into the details of the claim, before it can be paid out. Understanding the steps and getting an estimate of how long the process could take, could eliminate unnecessary frustration and disappointment when it comes to the claims process.
So, when you make that call in 2024 or reach out to enquire, don’t be afraid to ask the right questions. Make sure your cover fits your unique needs by finding potential savings and that you are not caught off guard by unexpected life events.
