Understanding insurance duties
Get peace of mind that you're holding insurance cover in a way that won't come back to bite you when it comes to claim time.
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Taking out insurance policies in one form or another is a part of life. Some of the key duties you'll have as a consumer include giving accurate responses for your applications and letting your insurer know when life moves on and your circumstances change. Let's take a look.
Important duties And responsibilities
There are a number of duties and responsibilities relating to insurance cover, and these duties apply to both the insurance provider and the person who is taking out the insurance. There are some things that are the responsibility of the insurance provider and others that are the duty of the consumer. By knowing who is responsible for what under official regulations you can have greater peace of mind with regards to any insurance cover that you take out.
First off, you should always make sure you check the details and small print of any insurance policy (often called the 'Product Disclosure Statement', or simply 'PDS') you're looking to take out, as this will provide you with vital details about your duties as the policyholder and the duties of the insurance provider. It is important that these duties and responsibilities are adhered to by both parties to ensure the validity of the cover.
What are some of the key duties of the provider?
Some of the duties of the insurance provider include:
- Providing details of policy restrictions. It is the duty of your insurance provider to issue you with details of the restrictions on the policy. This is something that needs to be done before you sign on the dotted line and before any insurance documents are issued. In order to comply with this, the insurance provider needs to provide you with a copy of the policy, in which the language should be clear and easy to understand.
- Changes to the terms of the policy. Insurance companies can and do make changes to insurance plans and policies. However, it is the duty of the provider to inform you in plenty of time of any changes, particularly if they might have an adverse effect on you and your right to claim. If the insurance firm fails to notify you of changes, and you then find that you cannot make a claim as a result of the changes that you were not notified of, you may be able to challenge the provider.
- Changes to premiums. If your insurance provider decides to increase your premiums, it is their duty to provide you with adequate notice to the change in premiums.
- Policy expiry. It is the duty of the insurance provider to advise customers of their policy expiration date and if they are prepared to renew the policy. Any changes to the policy terms or premiums should also be provided. Generally, policies will continue unless you have taken out alternative cover or if you have cancelled your cover.
What are some of the key duties of the consumer/policy holder?
Some of the duties of consumers and policyholders include:
- Disclosure of information. When you make your application for insurance cover you must ensure that you provide honest and accurate answers to all questions on the form. Failure to disclose information to questions on the application could result in the insurance firm refusing to pay out if you falsified or failed to disclose key information.
- Changes in circumstances. It is your duty as the policyholder to ensure that you inform your insurance provider about any changes to your circumstances. This could be anything from a change in your health to changes in your household, career, etc. Your provider will assess if any change affect your cover.
- Renewal. It is the duty of the provider to inform you when your insurance cover is due to expire, giving you the opportunity to renew. However, some insurance firms have automatic renewal in place, where your policy continues unless you actively cancel. If you have automatic renewal on your plan, it is your duty to contact the insurance firm to cancel before the renewal date should you wish to do so.
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