Insurance is a serious matter. It’s technical, and bound by legal precedents, all which points to a heavy reliance on credibility, proven performance, financial well being and an insurers attitude towards clients’ needs and claims management.
12 Lies Your Insurance Consultant Tries to Tell You ranks the most common ‘untruths’ novice owner builders face each day.Insurance is all about the policy wording.
This document is often referred as Product Disclosure Statement and is the final word and contract of insurance that determines your precise cover. As Australians have witnessed recently, ‘big’ insurance companies have been caught out on how not to pay claims by manipulating and confusing Product Disclosure Statements.
12 Lies Your Insurance Consultant Tries to Tell You, are all part of their job training, because story telling (true or untrue) is a sales jockey mantra. These tactics embrace the old school trick, ‘when unable to sell on quality or substance of a product introduce a free offer’, in other word ‘tin salesmen’ with trinkets in hand, such as the old steak knives routine.
Deception 1. Unknown and unrecognisable insurers and underwriter brands who are dressed to look like long standing owner builder insurance firms. Annually, insurers are subject to independent financial and claims management audits and reviews. These reviews produce ‘ratings’ which are a measure of an insurer’s willingness and capability to promptly settle claims and their financial stability. Deceptive behaviour occurs when sales consultants apply a global rating generated from London or New York and renames it as an Australian ratings. Insurance is all about an unforeseen incident and the subsequent claim. And whilst ‘it’s not going to happen to me’, you’re here because it may. Claims processes and performance records are important. Local and on the ground claims specialists are just as important, so watch out for the overseas call centre solution.
Deception 2. Comprehensive cover but excludes (in the small print section) ‘water’ related damage. Water is the core root cause of over 50% of all claims lodged.
Deception 3. Insured is referred as Principal Contractor and include subcontractors. By definition owner builders cannot be ‘Principal’ Contractor. An owner builder is both the building site owner and the builder. There is no Principal contractor, and therefore is excluded.
Deception 4. Adding policy benefits that are very unlikely to ever be called on. For example, Goods in Transit to $50,000 cover (special conditions apply and only if the vehicle carrying goods is stationary and has no other insurance attached). Increased cost of workings redressed to resemble escalation of costs allowance, (increased cost of workings refers to cost and repairs necessarily incurred for temporary works pending permanent repairs or restoration. It is not increased cost of rebuilding or repairing damaged property).
Deception 5. Low excess levels is good value. No, it’s not good value for owner builders. Lodging a claim for loss or damage for any less than $1,000 is nonsense. An owner builder is required to report and declare all claims for a period between 5 and 8 years on any future insurance renewals and applications. But there more, low excess does not apply to Theft or Burgurly which account for 48% of all claims lodged.
Deception 6. Undecipherable named insurers or multi or split insurers tucked into your quote to present one insurer or underwriter. Who ultimately is the insurer or party of last resort that will address your concerns or claims or disputes?
Deception 7. Subcontractors cover. Subcontractors are independent entities and are required by law and professional standards to hold appropriate insurances. Should an incident occur, and the cause of the incident is subcontractor or their employee actions and their insurance is either inadequate or does not cover the incident, and the owner builder is dragged, roped or coupled into a claim, any ‘quality’ insurance policy will always protect the owner builder.
Deception 8. Insurance Period is extendable beyond an initial 12 month period. Non extendable insurances leaving owner builders without insurance at the very last minute. Particularly when structures and fittings are at their prime value.
Deception 9. Non owner builder insurances re branded to look owner builder. An example, One Off Contract Works insurance: owner builders are one off and are not project builders!
Deception 10. Quoted and upfront premium is actually an interim premium to be finalised at completion of construction project. A premium which is actually a part premium.
Deception 11. Claims disputes can only be lodged under NSW Law (jurisdiction) and an owner builders must cover their own costs, including legal representation in NSW courts. What about those who don’t reside in NSW.
Deception 12. Workers Compensation Insurance, the cheekiest up-sell of all. Owner builders, in the overwhelming vast majority are not employers. Subcontractors including sole traders are not employees by definition. If Workers Compensation only protects employees, how do owner builders benefit or reduce their risk?
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Categorised in: ACT Owner Building, Granny Flat. Garage. Shed., NSW Owner Building, Owner Builder Insurance Cover, Queensland Owner Building, SA Owner Building, Tasmania Owner Building, Victorian Owner Building
This post was written by Technical Underwriting Centre