Insurance companies provide access to web calculators on their websites so that you can estimate out how much it would cost to rebuild your home or replace your belongings. The estimate will be a guide only and it is not a professional valuation. You’ll need to be comfortable that the estimate reflects the actual replacement costs. It’s important to choose an adequate amount and not to be underinsured. Should the worst happen and you have undervalued your assets, you may not have enough financial capacity to rebuild or replace all of your belongings.
Code of Practice
Q: What is consumer credit insurance?
A: Consumer credit insurance (CCI) provides cover for consumers if they are unable to meet their minimum loan repayments due to unemployment, sickness or injury or to pay the outstanding loan balance upon death. CCI is optional and usually sold by lenders to consumers with a credit card, personal loan or home loan.
Q: What is a no claims discount?
A: It is a saving on the price you would pay for your insurance policy, based on your claims history. The more consecutive years you remain claims-free, the bigger your discount.
Q: If an insurer can’t provide me with insurance cover, what will they do?
A: They will give reasons for their decision; tell you about your right to ask for the information that they relied on when assessing the application; refer you to the ICA or NIBA for alternative options for insurance; give information about their complaints process if you are unhappy with their decision.
Q: What is duty of disclosure?
A: When you apply for an insurance policy, or renew or extend your existing policy, you have to tell the insurer everything about you and your situation that is relevant or could reasonably be expected to be relevant to the insurer’s decision to insure you. You don’t need to disclose something you don’t know, that reduces the insurer’s risk, that is common knowledge, that the insurer knows or ought to know, or something that’s not relevant or the insurer has told you that you don’t need to disclose. With insurance, honesty is the best policy.
Q: What does acting in good faith mean?
A: Each party to the insurance contract – the policyholder, the insurer and a third party beneficiary (a person who is entitled to the benefits of the insurance policy) – must act with fairness, decency and fair dealing as well as honesty in their dealings with one another. An example of this would be an insured policyholder’s obligation to make full disclosure of all relevant facts when taking out the insurance in line with their duty of disclosure. An example for an insurer would be to respond to a claim made under a policy in a timely fashion.
The duty of utmost good faith is central to and regulates all aspects of the contract of insurance, from inception through to the terms of the contract, to each party’s responsibilities in the event of a claim under the contract of insurance. One of the reasons why the duty of utmost good faith was developed under the common law is because often information of vital importance to the insurance contract is only known to one party, for example, an existing structural defect in a building for which the owner occupier wants to purchase home insurance. Under this duty the party possessing the knowledge must disclose all material and relevant facts to the other party to the contract so that the other party can make an accurate assessment of what they are undertaking.
The duty of utmost good faith is now an implied statutory term inserted into every general insurance contract in Australia under section 13 of the Insurance Contracts Act 1984. Section 13 requires both the insurer and the insured to act towards the other, in respect of any matter arising under or in relation to it, with the utmost good faith. Therefore, like the common law, the duty spans from the pre-contractual stage (duty of disclosure) to the post-contractual stage (the making and handling of claims). In addition, being a contractual term, damages are allowed to the innocent party in case of a breach.