Most insurance problems do not arise because cover is unavailable. They arise because policyholders did not fully understand what they bought.
Insurance works best when there are no surprises. These five principles will help you get real value from your policies and avoid the most common and costly mistakes.
1. Understand What Is Actually Covered
Many policyholders assume insurance is broad and automatic. In reality, every policy is a contract with defined inclusions, exclusions, limits and conditions.
You should know:
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What assets or activities are insured
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What events are excluded
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Any sub limits that cap certain claims
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Conditions you must comply with, such as maintenance or security requirements
If you cannot clearly explain what your policy does and does not cover, it is worth reviewing it with your broker or adviser before a claim occurs
2. Check Sums Insured and Avoid Underinsurance
Underinsurance is one of the most common and expensive errors. If your sums insured are too low, insurers can reduce claims proportionally, not just to the shortfall.
This is particularly important for:
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Buildings and fitouts where rebuild costs increase over time
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Business contents and equipment that has grown gradually
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Revenue and business interruption periods that no longer reflect reality
A policy that is cheaper because it is underinsured is not saving money. It is transferring risk back to you when you need the insurer most.
3. Disclose Changes as They Happen
Insurance is based on information provided at the time of placement. When circumstances change, insurers expect to be told.
Common changes that must be disclosed include:
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New business activities or services
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Increased turnover or payroll
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Changes to property use or occupancy
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New equipment, vehicles or locations
Failing to disclose changes can result in reduced claims or declined cover. When in doubt, disclose. It is always safer to over communicate than under communicate.
4. Know Your Excesses and Claim Triggers
Not every loss is worth claiming, and not every event automatically triggers cover.
You should understand:
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Your excess amounts for different sections
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When a claim must be notified
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Time limits that apply to certain claims
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What evidence or documentation is required
Knowing this in advance helps you respond calmly and efficiently when something goes wrong, rather than scrambling under pressure.
5. Insurance Is Not Set and Forget
Insurance should evolve with your life or business. A policy that was perfect two years ago may now be outdated.
Policies should be reviewed:
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At every renewal
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After major purchases or expansions
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Following claims or near misses
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When market conditions change
A proactive review often identifies improvements in coverage, structure or cost. Waiting until after a loss is when gaps are discovered, and that is always too late.
Final Thought
Insurance is not just about price. It is about certainty. The best policyholders are informed, proactive and comfortable asking questions. If your insurance feels confusing or unclear, that is a signal to review it now, not later.
Clarity today prevents disputes tomorrow.
