25 Jun 2024
Do you know your insurance IQ?

Do you know your insurance IQ?

Understanding insurance may seem like a chore, but it’s important to know what you’re covered for and how things work. Here’s our A-Z of terms so you can improve your Insurance IQ.

An insurance assessor (or loss adjuster) reviews insurance claims to determine the circumstances of the claim and assess the loss and its total value. An assessor may specialise in a particular area, for example medical, property or motor vehicles.

Accidental Damage
'Accidental Damage' is a common term used in property insurance. It’s a type of cover that may be included in your policy, or it may be an option that can be added to your insurance for an extra premium.

It can cover unexpected and unintended mishaps that cause accidental damage – for example, if you drop your TV while moving it around the house, or things like damage caused by a power surge. It can also cover accidental loss of property too.

Agreed value
Agreed value usually refers to vehicle insurance and is the amount you and the insurer agree to insure the vehicle during the period of insurance.

An insurance broker is a professional adviser, who works on behalf of customers to help them understand the risks they face and the insurances they might need.

They can help customers determine complex insurance needs where multiple insurance products might be needed, for example, if you run a business. In the event of a claim, a broker can also act on the customer’s behalf to manage the claims process.

A catastrophe is an event – usually resulting from bushfire, flood, earthquake, cyclone, severe storm, or hail – which results in a large number of insurance claims and can involve multiple insurers.

To officially be a catastrophe, it must be declared as such by the Insurance Council of Australia.

Certificate of Insurance
This is a formal document and forms part of the insurance contract between an insurer and a customer. It shows the information that forms the basis on which an insurer agrees to insure a customer, including information about the customer and the property they are insuring.

A claim is when you make a request for compensation from your insurer after suffering a loss that is covered by an insurance policy you have. For example, if your car was vandalised, you may make a claim against your comprehensive car insurance policy.

Contents insurance
Contents insurance can cover your belongings if they are destroyed or damaged by an event such as flood, fire, storm or theft. QBE has different policy options available depending on your situation. Cover for your contents can be combined with cover for your building under QBE Home Insurance, or you can choose a standalone cover if you are a renter or a strata owner-occupier under QBE Contents Insurance.

If you want to cover contents in your investment property, QBE Landlord Insurance is also available.

Cooling off period
Most general insurance products have a cooling off period of at least 21 days, to allow for a change of mind. If you change your mind, all premiums paid should be refunded, unless you need to make a claim on your policy.

Coverage describes what is included in your insurance policy, the risks you’re insured against, who or what is covered, and the amounts you’re insured for.

The reduction in value of an item or property due to wear and tear, or age.

An excess is the amount you may have to contribute when you make a claim. If you choose to have a larger excess, you can sometimes reduce the amount of your premiums.

It’s important that you check your policy documents to understand the different types of excesses and how they might apply if you make a claim. In some scenarios, the excess can be waived.

Exclusions are scenarios that are not covered by your insurance policy. For example, these may include damage caused by illegal activity, or intentional, reckless or fraudulent acts.

A restriction preventing insurance being purchased or increased in certain areas if there is a known likelihood of an event occurring, or an event is already in progress. These are usually applied to specific products for a specific amount of time depending on the event.

For example, if you attempted to purchase home and contents insurance for your property when bushfires were active in the area, you may find that product is under embargo.

Home insurance
Home insurance can mean a few things. It can be used to describe property insurance in general, or it may be used to describe cover specific to your building. It’s important to read policy documentation to ensure you understand what’s included.

QBE Home Insurance is designed for owner occupiers, and offers protection for either the building, contents or both. It can cover the cost of replacing or repairing your property and belongings in case of fire, storm damage, theft and more.

An event or series of related events which results in a claim on your policy.

Landlord insurance
QBE Landlord Insurance provides cover for the cost of repairs or replacement of your rental property and/or contents in the event of storms, fire, theft, flood, tenant theft, vandalism and more. QBE’s Landlord Insurance can also cover loss of rent if your rental property is unliveable due to damage caused by an insured event.

A sum added to the insurance premium to raise money for a specific government purpose. For example, in NSW, insurers are required to apply an Emergency Service Levy to every home insurance policy to help fund emergency services.

Being responsible for an action or event that leads to a claim.

Actions you can take to reduce the potential occurrence or impact of an insurance event. For example, undertaking household maintenance on a regular basis could help mitigate the risk of water damage to your property.

Market value
The value of your property or vehicle if it was to be sold, based on the condition it was in just prior to the accident or claim. For contrast, see ‘Agreed Value’.

The amount of money you pay your insurance company for your insurance policy. Premiums can usually be paid monthly or annually.

The legal contract that describes your insurance cover. Your policy is made up of the Product Disclosure Statement (PDS), any applicable Supplementary PDS’ (SPDS) and your Certificate of Insurance.

Together, this forms the insurance contract between the insurer and a customer. See ‘Certificate of Insurance’.

An insurance policy usually provides cover for 12 months. Before the policy expires, your insurer will let you know it’s coming to an end and invite you to renew your cover. At this point you can choose to extend your policy cover for another 12 months. If you decide to renew, it’s a good idea to review your policy details and what coverage you have, and change it if your situation has changed.

In some cases, your insurer may offer a cash payment in response to a claim, rather than repairing your home or vehicle.

Sum insured
This is generally the maximum amount your insurer will pay for a claim on a policy, however there may be features included in your policy that provide extra cover.

Total loss
If your property or vehicle is damaged beyond repair, this will be a total loss. A total loss may result in a settlement at the sum insured.

Third party
An external party that’s not part of the insurance contract or policy. For example, QBE Third Party Property Damage Car Insurance covers damage to someone else’s vehicle or property.

When the amount you have something insured for is less than the value to replace it. For example, if you have your home insured for $500,000 but it would cost $750,000 to rebuild today, you would be underinsured.

It’s important to regularly check that your insurance policy adequately meets your needs, especially when there are changes to your life.

The process by which an insurance company assesses the risk it faces by offering you insurance. This then helps the insurer determine whether a risk is acceptable and set its premiums accordingly.

If you’re after home, contents or car insurance, get a quote today. Or if you need insurance for your small business, find out more and get a quote.

To decide if the product is right for you, please read the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD).

This content is brought to you by QBE Insurance (Australia) Limited (ABN 78 003 191 035, AFSL 239545) (QBE).

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