The Queensland floods took their toll on towns and families, businesses and crops.
And in the aftermath, the inevitable discussions started about insurance: what it covers, why it so often excludes flood damage, how people become so under-insured. I don’t have all the answers, but I would like to make this point: if insurance is important to your household or your business, you should be using an insurance broker.
Why? Because very few Australians are experts in this financial service and very few of us have the knowledge required to know exactly what cover we need, and to negotiate what price we should pay for it.
Most of the discussions I’ve heard lately about insurance come back to a lack of knowledge, and with this comes vulnerability. Insurance companies are generally ethical and fair.
But the information imbalance is huge – the insurer is an expert participant in a complicated and ever-changing market, whereas you just want to mitigate the risk in your life.
This is particularly the case with business insurance. Insurance is complex yet crucial, and if you don’t use a broker you’re probably not getting the best deal. Consider some of these covers that you may not have heard of:
* Removal of debris: Covers the removal and/or disposal of debris. It should amount to 10 percent of the sum insured.
* Professional fees: Covers architects, surveyors, engineers, legal services – basically fees incurred in reinstating your business.
* Loss of land value: The reduction of land value that results from regulation or legislation does not allow you to rebuild.
* Claims preparation: You can cover yourself for professional fees incurred to prepare your claim to the insurer. * Business interruption: Cover for the additional costs of getting back to normal trading.
* Fire & perils: You must extend this section to include damage resulting from flood.
It must be stated. And remember, with business policies, all of the cover must be replacement cost, and new-for-old. And the policy must state this.
It’s worth noting, in the wake of the Queensland floods, that flood damage is known in Australian insurance circles as a ‘standard exclusion’. It has to be included, but you may not know that. A broker does.
Most insurers have negotiable no-claim bonus systems and they have several different wordings for the ‘new for old’ replacement promise. Do you know which wording is the best for you? Your broker does.
There is nothing that annoys me more than watching good people left high and dry because they simply were not informed.
So, the best approach to insurance may be this: if you don’t understand everything about your insurance, find someone who does.