<title> Understanding the New Insurance Code of Practice in Australia </title>

Understanding the New Insurance Code of Practice in Australia

Everyone wants to own his or her own home in Australia. In recent times, the problems of consumers not fully understanding the terminology in their car insurance policies has led to a lot of heartache and grief. Natural disasters have left many without homes and a livelihood. Insurance companies, the complex terminology used, and the plight of those left with nothing has been the main force behind a need for change.

New Insurance Code of Practice in Australia

A standard set of laws governing the use of terminology and insurance definitions in contracts is still not available for consumers. Many argue this will solve all the issues that constantly arise. What we have seen is the development and increasing importance of the General Insurance Code of Practice in Australia. When natural disasters strike, the code gets a lot of attention. For anyone who is planning to purchase insurance in Australia, it is a must to know and understand. What does this really mean for the average consumer, and what do we really need to know?

  • What is the code? The code is a self-regulatory agreement to which around 90% of insurance companies in Australia are signatories to. It was designed to raise the standards of insurance companies, and to let consumers know what they should expect from insurance companies in Australia. The last update came into effect on May 1, 2010. It is important to understand the code of practice is not law. The code is monitored by the Financial Ombudsman Service and is modified by an independent body every 3 years.


  • Is your insurer a part of the agreement. Everyone should know if his or her insurer is a part of the code. If they are not, you should consider changing your insurer. It is the closest thing to setting minimum standards in a business that is often misunderstood.
  • Who should read it? Although the code is a lengthy document, any adult who is considering buying insurance for the first time should read the code. By reading the document and reading summaries and explanations of the code, we have a better understanding of what we can expect, and what is realistic when we buy insurance.

 

  • What insurance does it cover? The code covers all general insurance except for workers compensation, marine insurance, medical indemnity insurance, and compulsory third party insurance including where there is linked driver protection cover (it still covers normal home insurance), health insurance products released by life insurance or health insurance companies and reinsurance.
  • What does it explain? The code covers the main issues for insurance that are of concern for consumers. It explains four distinct areas. They are; the responsibilities of the provider when selling of insurance, how providers must deal with claims, how providers need to deal with responding to disasters and how they supply information and handle complaints.

Understanding insurance is the purchase of a contract. A contract is built around the terminology and the definitions of those terms in your contract. If you are not completely clear on the exact meaning of those terms as per the definitions in your policy, then you should see outside help. It is up to us as consumers to make our own informed decisions when buying insurance. Buying insurance for peace of mind does not make sense.

We cannot bend the meanings of the terminology used in our policies, and it can be difficult and very expensive to argue the meaning of the word is different to that which is explained in the definitions part of your policy. Always take care. This misunderstanding is the crux of most insurance claim refusals, and a considerable amount of heartache. Compare insurance quotes, and compare insurance policies. First of all, make sure you have read the code of practice.

Related Posts Plugin for WordPress, Blogger...