‘PDS’ A product disclosure statement (PDS) tells you what you are insured for and what you are not insured for under a specific insurance policy. A PDS highlights things such as who the insurer is, where its office is located, what events you are insured for, the policy limitations, exclusions, conditions, benefits and very importantly, information on ‘how to make a claim’. A broker is required to give a PDS to you by law. Reading a PDS will allow you to make a judgement as to whether the recommended policy is right for you!’
‘Policy Wording’ Before the term ‘PDS’ was introduced, the detailed contract between the insurance company and the insured party was called a policy wording.
‘Insurance’ an arrangement generally between an insurance company or in some circumstance the Government, whereby either will undertake to provide a guarantee of compensation for specified loss, damage, illness, injury or death in return for payment of a premium.
‘Re-Insurance’ Reinsurance is insurance that is purchased by an insurance company from one or more other insurance companies. Insurance companies share risk by purchasing an insurance policy from another insurance company. Reinsurance is particularly important in times of natural disasters, such as named cyclones, bushfires, floods or earthquakes. In these scenarios the total cost of all claims could cause financial distress for any one insurance company, and it’s for this reason reinsurance is ‘big business’.
‘Certificate of Currency’ A certificate of currency is used to provide evidence that an insurance policy is in effect. You may be called upon to provide a certificate of currency when you are entering a contract with a third party and if you are responsible under the contract to be responsible for certain insurances. For example; you may be leasing a premises from a third party or you may be submitting a tender to supply services under contract. In this circumstance the principle contractor will ask you for a certificate if currency / certificate of insurance.
‘Underwriter’ An underwriter is generally another term for an insurance company. An underwriter ‘underwrites the transfer of risk’ from the insurance company or companies and the insured party via the terms and conditions specified in the PDS or policy wording. A good underwriter is an individual with a keen eye for detail and a strong understanding of insurance contracts.
‘Broker’ Also known as an intermediary, because a broker operates in between the ‘seller’, the insurance company and the ‘buyer’, the insured party (You). When choosing a broker, you should be looking for someone with years of experience, and this generally is earned by working for insurance companies as well as insurance brokerages. A general insurance broker in Australia must also be licensed and must undertake regular ongoing technical training for compliance. A general insurance broker is as important to your business as your accountant or legal advisor is. You do not want to engage a salesperson, you need experienced advice that is easily accessible and trusted!
Important – Insurance terms and conditions will differ between insurance policies and insurance companies; you should always read a product disclosure statement (PDS) before making any decisions.
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