Insurance 101

I’m always on the hunt for relevant info and I loved this - one of the best articles I’ve seen on this topic for a while. Here are a few paragraphs as a taster... 

Insurance can feel complicated at times. With so many foreign terms and concepts to get your head around it can be a little overwhelming. Understanding some common insurance-related language and concepts can go a long way to helping you make informed choices.

Here are some common terms and concepts that you need to understand.

Risk and insurance

Through the course of our lives we accumulate assets by buying products, homes and vehicles. Many people choose to take out an insurance policy to protect them from a potential loss. This loss might occur through theft or damage, or it could be a total loss through an event like a fire or flood. In most cases the policy may also cover injury to other people.

Insurance Contracts Act

When you take out an insurance policy you are actually entering into a contract between an insurer and a customer. This contract is governed by the Insurance Contracts Act 1984, which is an Act of Parliament that sets the rules of all insurance policies.

Duty of disclosure

An insurer calculates the amount you pay for your insurance (called a premium) based on your answers to a series of questions. These questions relate specifically to what you want to insure. Over a period of time insurers have gathered a great deal of information about various risk factors across the different types of insurance, and the price that you are charged changes according to the level of risk.

Premium

The premium refers to the amount of money that you pay the insurer to take on your insurance risk. It is calculated based on the information you have provided to the insurer. The premium amount will also show government taxes such as GST and stamp duty and may include a Fire Service Levy where applicable.

Pretty valuable stuff, I’m sure you’ll agree! Why not check out the whole article here and share your thoughts with me afterwards: call (0403) 296-221 or email me at [email protected].

Thanks,

Tammie