Your PDS (a.k.a. Product Disclosure Statement) is a Very Important Document.
It’s the booklet your insurer must provide to anyone who quotes or purchases an insurance policy with them. It’s also a legal document, and an important part of the insurance contract you have with the insurer when you take out a policy.
What it isn’t, sadly, is interesting [if you’re not an insurance nerd type, or into legal-speak for fun]. They’re often long, full of complicated insurance terms and jargon, and they’re likely to put you to sleep if you don’t understand what the heck you’re reading.
But it’s still a Very Important Document and one you really need to read, so here is a short and sweet post about how to review your PDS in 10 minutes (or enough time to enjoy a quick cuppa).
Table of Contents – get to know your sections
Your PDS (otherwise known as a Policy Wording, or Wordings as us insurance nerds tend to call them) are structured roughly the same across the board. They generally start with an intro on who the insurance company is, any affiliations they have and their contact details – cos, compliance – and then move into a bit of info on cooling off periods, and what the purpose of the PDS is.
They’re designed to be readable [….] but sometimes miss the mark and fall into the trap of jargon and lengthy sentences – so reader beware!
The easiest way to navigate at the start, is check out the contents page as all the main sections will be headlined and you can jump around as you wish when you know where to go.
Which leads into…
The coverage section
This is the bit that tells you what is covered, and what is not covered. Some insurers have this section in a nice table with the what’s covered and what’s not lined up neatly, others will give you the run-down dot-point style with what’s covered then give you another run-down of what’s not covered.
If there are any sub-limits to the cover, the insurer will usually tell you in this section and point you to another page that will tell you what those sub-limits are. For example, a home and contents policy will have a sub-limit on items of jewellery. The main coverage section will tell you what jewellery is covered for and then direct you to page X which tells you that there is a $2,000 limit per item on jewellery items unless you list them for full value.
The insurer must tell you if any sub-limits to the cover apply, so keep an eye out for any mentions of sub-limits in your PDS.
The next logical section to jump to is;
The exclusions – section wide and policy wide
If your PDS has already listed the things you’re not covered for in the previous section, the exclusions will be general in nature and refer to the standard exclusions you’ll see in Australian insurance policies.
They might be things like;
War, terrorism and radioactivity
And the like. Every policy will have different approaches here, but these are pretty standard across the board.
Sometimes the PDS will have exclusions specific to each section. Like intentional damage, or termites, or wear and tear exclusions under the property sections. The theft section might have exclusions if your security system is not operational, or if there is no forcible or violent entry. The money section might exclude money kept on the premises overnight but not locked in a safe.
The easiest way to get across the exclusions in your PDS is to run a quick CTRL+F search for “exclusions” and you can then navigate to those quickly. Or if you’re old schooling it with a hard-copy PDS, scan through the table of contents and highlight anything that says “exclusion” then flip to those pages.
Terms & Conditions
I know hardly anyone actually reads the T&C’s these days. Let’s all admit we’ve signed at least one child and the car away to Apple or Spotify or some other global corporation in the pursuit of a quick sign-up!
But in insurance-land, it’s a good idea to at least cast your eyes over this section.
It’s going to contain things like your Duty of Disclosure obligations – the legal obligation to tell the insurer of certain things that might be relevant to their decision to insure you. If you don’t disclose something that the insurer should have known, they can decline a claim, reduce your settlement and even cancel your policy leaving you uninsured.
It also includes details of when you should tell the insurer something it needs to know. Your disclosure obligations don’t just end once you’ve taken out the policy for the first time. You need to let them know of any changes to your disclosure at renewal time or when any changes are made to the policy.
Let’s all just agree that honesty is always the best policy, but especially when it comes to insurance!
Always a good bit to cast your eyes over quickly, just to check the insurers definition of a word is not dramatically different to yours! You don’t want to try and claim the damage to that awning on your caravan only to find out they call it an annexe and you didn’t specify an annexe when you took out the policy – sorry, no cover!
Don’t spend too much time on this, but maybe just make note that your contents in your home policy for example, includes fixed carpets and window furnishings, cos – duh [thanks weird insurance thing #452].
Claims examples and how they’re settled
Most PDS’s will have some claims examples tucked away, either attached to the coverage sections, or in a spot of their own. Handy to have a quick look to understand how the insurer will approach your claim and what the basis of settlement is.
Be on the look-out for the term “at our option” or “at our discretion” or similar, after any OR options.
We will repair or replace with new, or as new if new cannot be sourced, or cash settle, if your property is damaged by storm.
This means they have the option of repairing OR replacing and the emphasis is on their option. This often applies for cash-settlement options also.
They may also include references to policy limits, what they won’t pay or how they won’t settle, so that’s it’s as clear as [mud] can be.
Cancellation and other important bits
This may not be it’s own section, so just scan the table of contents for anything mentioning “cancellation” and head there.
Every PDS should have something to explain your obligations around cancellation and cooling-off, as well as the insurers obligations around cancelling your policy for things like non-disclosure or non-payment. It’s an insurance contract, don’t forget, so both parties have obligations that must be met.
Also take a look for their complaints process and if you’re feeling particularly spritely at this point, why not have a look over the code of conduct and privacy bits for peace of mind that the insurer takes regulatory compliance and privacy very seriously, just as it should.
So there you have it, how to review that pesky PDS in 10 minutes (or enough time for a cuppa).
Despite their bad rep as booklets-of-mass-boredom and “awesome for getting to sleep if you’re an insomniac”, they’re actually really important little documents.
If you’re buying an insurance policy, you 100% should understand what it is you’re paying for.
Follow the 10 minute formula, and you’ll get a good handle on what you need to know.
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