Tips for comparing insurance policies and potential red flags
Choosing the right insurance can be difficult because every company’s needs are different.
There is so much choice in today’s insurance market that comparing providers and policies can make the decision even harder.
Daniel Waters, director of Mavco Insurance Group, says people can be overwhelmed by decisions as they try comparing apples to apples between providers.
“Whether people decide to compare insurance products themselves or consult an insurance advisor, it is still can be a time-consuming process to ensure that your business is covered properly,” he explains.
“There are websites now that help clients with comparing insurance, but the only downside is that you must go through and understand all of the products and that can be challenging.
“Therefore, they might be better off getting advice from a professional on the products and what they cover.
"An insurance advising firm should be able to make a comparison on the price of insurance coverage and applicable excess, in the event of a claim against the policy — also, the terms and conditions and any applicable exclusions for the client.”
Waters says people should be aware the standard policies have restrictions and exclusions that the insurers don’t want to cover.
This can be for any number of undisclosed reasons. And if those risks are pertinent to the business, then that would lead you to the conclusion that those policies are not going to be suitable.
Common restrictions could be:
- Use of equipment for non-prescribed applications
- Employees engaged in dangerous work
- Business operating in volatile geographic areas.
Waters says that mandatory product disclosure statements (PDS) can help make comparisons between policies as providers must clearly outline coverage, definitions and exclusions of an insurance product.
He says a PDS also provides the terms and conditions that go along with the policy, but the documents still tend to be complicated and time consuming to understand.
Tips and red flags when comparing insurance
Get a comparable product: Cheap does not necessarily mean that a policy is right for your business because it may not cover everything pertinent in your organisation.
Compare benefits: If there is little difference between insurers, the extras could give a good reason to select one insurer over the other.
Compare your excesses: Do the math up front. If you are exposed to a lot of money, it’s a good idea to work out if the business could sustain high excess costs.
Get references: A lousy service experience can quickly sour the best premium and coverage in the world by your insurer in your time of need.
Compare different products: Once you’ve decided which insurer you want to be with, make sure you’ve chosen the right type insurance. This is where a licensed insurance broker can help.