Insurance is a contract that can protect you against losses, injury, damage, or natural disasters in exchange for a fee (known as a premium). The concept of insurance itself is simple, but when it comes to the jargon and terminology it's easy to feel overwhelmed.

Here is a quick guide to the basics of the insurance industry and all you need to know.

What are insurance premiums?

Your insurance premium is what you pay in return for the policy. It can include mandatory government charges such as:

• Emergency Services Levy (ESL)
• Goods and Services Tax (GST)
• Stamp Duty
• Reinsurance Costs

There are many factors that go into determining what your premium will cost, including evaluating the type of risk you have. Insurers will look at claims history, statistics, and probability calculations to assess your likelihood of a claim and therefore how much your premium will cost.

If you are looking to reduce the premium that you pay, there are a few options. You can start with reviewing your situation when your renewal time is up, ensuring that you aren't paying for any extras that you don't need anymore. 

Another way you can reduce your premium is by choosing a higher excess.

What is an Insurance Excess?

An excess is what you need to pay in the event of a claim. If you have a lower premium, you will have a higher excess that you need to pay if you need to lodge a claim.

If you have an excess of $1,000 and you have a claim for $10,000, the insurer will make up the remaining $9,000. In this way, excess is your contribution towards the cost of loss.

Voluntary Excess vs Compulsory Excess

The voluntary excess is how much you choose to pay and you can adjust this amount to alter your annual or monthly premium payments.

The compulsory excess is set by some insurers and is non-negotiable based on your risk profile. For car insurance, this could include a young driver's excess, or there could be a compulsory high excess on high-risk areas. If you have a compulsory excess, you can choose to also pay a voluntary excess on top of that.

Types of Insurance in Australia

What type of insurance cover are you looking for? Find out more about our services by clicking on the buttons below:

Commercial Motor/Truck Insurance   Machinery, Plant and Equipment Insurance 

Farm Insurance   Business Package Insurance   Public and Products Liability Insurance   

Management Liability Insurance   Marine Insurance   Home and Contents Insurance   

Landlords Insurance   Cyber Insurance   Private Motor Vehicle Insurance

Insurance Terminology and Acronyms

If you have done some online research or talked to an insurance broker, you may have come across some common terms and acronyms. Here are some general insurance definitions:

• Product Disclosure Statement (PDS): This is a mandatory document that financial services need to provide that includes features, fees, benefits, risks, compliant procedures and terms about a product.
• Australian Prudential Regulatory Authority (APRA): The regulator of Australia's financial services industry to ensure companies manage risks according to the law.
• Australian Securities and Investments Commission (ASIC): They are the regulatory body that ensures financial markets are transparent and fair and enforcing the Insurance Contracts Act 1984.
• Policy Schedule: This document outlines your details of cover, insured parties, sum insured, and special conditions. This will include your details and be unique to you and include essential coverage information.
• Policy Holder: Also called a policy owner, this is the individual or company who owns the policy and takes responsibility over the payments.
• Insured: While in some cases this can be the same person as the policy holder, the insured is who is protected by the policy. For example, a parent (policy holder) can pay for life insurance of their child (the insured).
• Certificate of Insurance (COI): Also called a Certificate of Currency, this contains key details about your policy like limits of cover and effective dates. This can be requested as proof of insurance by third-parties for contractors, mortgage brokers, agents, events or rentals.
• Target Market Determination (TMD): A mandatory document that ensures a financial product is suitable to the customer.
• Cooling-off period: The legally mandated timeframe after signing a contract to allow the buyer to cancel.
• Grace period: The period of time after a due date in which you can still pay without cancellation.
• Market value: The amount an insurer pays if your vehicle is damaged beyond repair or stolen. This value is based on the market at the time of the claim.
• Agreed value: This is the chosen value of your vehicle that you choose. It can be increased or decreased but must remain within the acceptable range of the insurer.
• Total loss: The settlement of a claim where the property or vehicle is damaged beyond repair, or considered unsafe. The insurer will defer to either a market value or agreed value payment as per your policy.
• Insured events: Also called defined events, this is the type of cover you can choose to take that insures you against events like fire, malicious damage, theft, flood, or storm. Defined events will vary between types of insurance, but the range of coverage can be found in the PDS.
• Accidental damage: Cover against unexpected damage in your home. This typically doesn't cover wear and tear or intentional damage. For home insurance accidental damage would cover mishaps like a spill on carpet, dropped laptop, or a cricket ball through the window.
• Insurance broker: Someone who uses expertise to research the market for you and compare quotes on your behalf to find the most suitable policy. They also help advocate for you in the event of a claim. Read more about the Benefits of an Insurance Broker.

Looking for an Australian Insurance Broker?

Peter Cameron Insurance Broker services Australia wide. If you have questions about your cover or need help finding competitive quotes, we can help you.

Contact us directly by calling our office on 02 6771 3422 or submit a quote online by clicking below. Our friendly customer-focused team is always happy to help.

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