Understanding Your Policy And Your Rights
You’ve probably heard the phrase before, ‘the devil is in the detail.’ When talking about insurance, what point this phrase really drives home is that most of us don’t read our policy documents as carefully as we should. The essential ingredient when you purchase insurance is to understand the intention and meaning of the policy and the schedule attaching to it that describes what exactly is being insured.
In Australia, as well as in many other countries, insurance is considered a financial product, and as such, is heavily regulated. This is a good thing for you. It means consumers of insurance products and services have certain rights of redress and access to complaints services that are free of charge.
When you buy an insurance policy, you are entitled to purchase it with the expectation of getting what you pay for. This is a critical point because it means you need to fully understand what you are buying. Asking a family member or friend is not recommended. You should always seek advice from the right source. Aside from licensed, financial professionals, you can learn more about insurance terminology and what a policy covers on one of these websites:
- Insurance Council of Australia
- National Insurance Brokers Association Australasia
- Australian Securities and Investments Commission (ASIC) – Moneysmart
- Financial Ombudsman Service Australia
When you purchase insurance, you will receive a policy schedule and wording outlining details of the insured and the risk being covered. With certain types of insurance, known as retail products, you’ll also receive a ‘Product Disclosure Statement’ and a ‘Financial Services Guide.’
Financial Services Guide (FSG): The purpose of the FSG is to help you make an informed decision about obtaining services through a service provider such as an insurance broker or insurance agent.
Product Disclosure Statement (PDS): The purpose of the PDS is to help you make an informed decision about the appropriateness of the insurance product you are considering.
With retail products, you, whether as an individual or small business, have access to free complaints handling services.
The following are all retail products:
- Home buildings
- Home contents
- Personal & Domestic Property (e.g. pleasure craft, personal effects, pets, etc.)
- Personal Accident
- Consumer Credit
- Medical Indemnity Insurance
Basically, this means if you feel you have been harshly or unfairly dealt with when you make a claim, you have rights of redress.
Here’s how the complaints process works:
1. You let your insurer know you are dissatisfied. Your insurer is required by law to have an internal disputes resolution process to take care of any complaints.
2. If after they review your complaint, you aren’t happy with the response, you will be directed to the Financial Ombudsman Service (FOS).
3. The FOS is independent and free of charge to you. The insurer is bound by the decisions of the FOS referee but the outcome is not binding on you – which means you can take your dispute further to the courts, although this will likely involve financial cost to you.
You contact your insurer or adviser and express dissatisfaction
Internal Disputes Resolution
The insurer will follow their internal disputes resolution (IDR) policies and procedures. This process is will be stated in their FSG or PDS and is time capped. This Process is free
External Disputes Resolution
If you are not satisfied with the outcome of the IDR process, you will be directed to the Financial Ombudsman Service - FOS who will consider the matter and make a determination. This Process is free
If, after all this, you are still not satisfied, you can seek legal redress through the courts. This process will most likely involve cost to you in legal expenses.