This fact sheet is one of a series that looks at the steps you can take to give yourself the best chance of fixing or replacing your property and belongings if they’re damaged or destroyed in a natural disaster, such as a bushfire, flood or storm.
To find other fact sheets in the series go to www.InsuranceCheckup.tas.gov.au or visit your local Service Tasmania for an info pack.
Understanding insurance
Some words or terms have a particular meaning when they relate to insurance. Sometimes, these definitions are long and very detailed. Always check with your insurer that your understanding of exactly what your insurance covers and does not cover matches their understanding. Here are some definitions of words and terms used in the fact sheets.
| Claim | When you lodge a claim, you are asking your insurer to compensate you for the loss you have suffered that is covered by your insurance policy. The compensation might be money or services, or it might be the repair or replacement of an item. |
| Clause | A clause is a section or part of your policy that relates to a particular point. |
| Contents insurance | Insurance that covers the personal items (your belongings) that you have in your home if they are damaged, lost or stolen. This might include furniture, clothes, electrical and electronic equipment, tools, musical instruments, sporting equipment and jewellery. |
| Contract | A legal agreement. |
| Deductible | A deductible is similar to an excess in that you will be responsible for some of the cost of your claim, but rather than paying in advance, the amount is taken off the payout you receive. |
| Excess | The amount you have to pay if you make a claim on your insurance policy (e.g. if you have chosen an excess of $300 and later make a claim under your policy, you will have to pay the first $300 of the claim amount to your insurer). Usually, a higher excess will mean you pay a lower premium. |
| Exclusions | Things that are not covered under an insurance policy, e.g. damage from a flood, or the cost of removing fallen trees from your property after a storm. |
| Home insurance | Insurance that covers financial losses associated with damage or loss of a property that you own. |
| Inclusions | What is covered under an insurance policy, including the property and location that is covered, the people who are insured, the limits of compensation, and what risks it covers, e.g. some policies do cover floods, but some do not, and others have limits to the coverage they provide. |
| Insurance assessor | An insurance assessor is someone who looks at the claim you have made – the situation, whether your claim is covered under your policy, the value of what has been damaged or lost, and how much it would cost to repair or replace what you have lost. They then advise your insurer who then makes a decision about your claim. |
| Insurance broker | A specialist who will work with you to find the best insurance policy to suit your needs. They get quotes, explain different policies, and help arrange cover when you have chosen an insurer. Some brokers charge their clients on a fee-for-service basis, while others get paid a commission by an insurer when a policy is purchased by the broker’s client. |
| Insurance policy | A legally binding contract between an insurer and you (the policyholder). The policy sets out the agreement you’ve made about the amount you will pay in order to be covered for particular events, and about how the insurer will deal with your situation and make it possible for you to repair or replace particular items if you make a claim on the policy. |
| Insurer | The insurer is the insurance company that sells insurance policies and pays the claims that are covered under insurance policies. |
| Key Facts Sheet | A short document that tells you basic information about an insurance policy. It’s still important to read the Product Disclosure Statement to get all the details. |
| Licence | An agreement that authorises the use or occupation of Crown land for a specified purpose. Unlike leases, licences don’t give exclusive possession and are often issued for shared use of Crown land, such as shared access over Reserved Roads. Other example purposes include apiary, grazing, and private slipways and jetties. |
| Payout | The sum of money paid to you – the policyholder – when your claim is accepted by your insurer. |
| Policyholder | The person who has entered into a contract with an insurer – they ‘hold’ an insurance policy. |
| Premium | The amount of money you pay to your insurer for your insurance policy. If something happens (e.g. your belongings are destroyed in a bushfire) and you are covered for that under your policy, then the insurer will pay you an amount towards repairing or replacing your belongings. The premium is usually an amount much less than you would have to pay to repair or replace your things if you didn’t have insurance. |
| Product Disclosure Statement | A document that gives you details of all of the important features of an insurance policy, including what it covers (inclusions), what it doesn’t cover (exclusions) and other terms and conditions. |
| Release | If you sign a release with your insurer, it generally means you are agreeing to their offer of compensation – whether that is money or repair or replacement of your damaged or lost property. But it can also mean that you are agreeing that you will not get any additional compensation from your insurer, even if you find out that your loss was bigger than you first thought. |
| Sum insured | The maximum amount an insurer will pay if your claim is successful. |
| Total loss | Total loss is when an asset or items (such as your home) is so badly damaged that it would cost more to repair it than it would to replace it. Depending on your policy, a total loss would usually result in you receiving the maximum sum insured to settle your claim. |
| Underinsurance | When the loss you suffer is greater than the cover you have under your insurance policy. This can happen when your policy is old and/or you haven’t updated it, e.g. if you have done some renovations and the value of your home has increased, or if you have bought new furniture or electronic equipment and haven’t added those items to your contents policy. |
Resources
For general information, and for calculators and other tools to help you manage your own insurance:
- Understand Insurance: www.understandinsurance.com.au
- Find an Insurer: www.findaninsurer.com.au
- Money Smart: www.moneysmart.gov.au
Important notice
This fact sheet gives you basic and general information only. It does not cover every situation or everything you may need to know about insurance. It does not take into account your personal circumstances. Make sure you carefully read Key Facts Sheets and Product Disclosure Statements. Ask your insurer as many questions as you need in order to understand how your insurance policy will work for you. Use other tools available to you and seek professional advice if needed.
Information in these fact sheets has been drawn from a number of publicly available Government and non-Government resources.
This project has been jointly funded by the Commonwealth and Tasmanian Governments under the Disaster Recovery Funding Arrangements.