Unlocking the detail: Simplifying your insurance policy

Understanding your insurance policy is crucial as it contains vital information that can have unexpected benefits.

Many policyholders are unaware of situations where their policy can save them money and time. For example, there was recently a case where a customer had “wrongful conversion” cover in their policy. If they had known about it, they could have filed a claim and saved themselves a significant amount of effort. Sometimes insurers include additional cover as part of their marketing strategy, such as legal expenses or helplines for HR-related issues, which can be valuable for businesses.

However, one common challenge is receiving a heap of documents from your broker all at once, leaving you unsure of where to start. Let’s break it down step by step:

Statement of fact: This document outlines the information you’ve provided to the insurers regarding your business and its directors. It’s crucial because any inaccuracies can greatly impact your policy’s performance.

Schedule: Often accompanied by the Statement of Fact, the Schedule provides more details about your business, including wages, turnover, activities, and trade description. It also includes important sections related to the terms and conditions of your policy, such as subjectivities, exclusions, endorsements, extensions, and conditions. The schedule also lists the excesses or deductibles for each section of cover and the declared sums insured.

The policies effectively, start by scanning the headings and understanding which sections are active and inactive. This will give you an idea of what your policy covers. Then, carefully review the terms and conditions to ensure compliance and gain a clear understanding of important “do’s and don’ts”.

These documents are often accompanied by a longer document called the “Policy Wording.” The Policy Wording provides further details specific to each cover section, including boundaries, insurable events, and definitions of subjectivities.

By reading and understanding these documents, businesses can benefit in several ways:

• Improved policy performance: Reading and comprehending the documents increases the likelihood of your policy performing as expected. If you have any uncertainties, your broker can assist you, and they can also make mid-term changes to ensure adequate cover.
• Tailored coverage: Businesses can modify their policy to remove sections they no longer require or consider unnecessary. Additionally, they can identify and utilise any additional free covers applicable to specific events.
• Enhanced risk management: Understanding your insurer and policy empowers you to provide valuable insights to your broker. By negotiating terms that align with your business needs, such as adjusting excesses, removing restrictions, or requesting higher insurable limits during growth periods, you become a knowledgeable buyer and contribute to better risk management.

While insurance policies may not be the most captivating reading material, they’re more accessible than you might think. Many customers reach out to me with questions about specific cover sections and wordings, and those who seek clarity enjoy greater certainty, better premiums, and a clear understanding of their responsibilities.

Remember, your insurance policy is a valuable tool, and taking the time to read and comprehend its contents can lead to significant benefits for your business.