The Law Handbook 2024

954 Section 10: Accidents, insurance and compensation Some insurers allow policyholders to choose the level of their excess where a higher excess results in a reduced premium. Never choose an excess that you cannot afford, even if this means you pay a higher premium. Some insurance contracts contain different excesses depending on the circumstances of the claim. For example, in motor vehicle insurance, a greater excess may be payable if the driver is below a certain age or inexperienced. Policyholders need to carefully read the insurance documents to clarify whether an excess other than the basic excess is payable towards a claim. In some policies, no excess is payable. An example of this is where a policyholder has pre-paid to remove the excess. Some insurers will not require a policyholder to pay an excess if the driver of the insured vehicle is not at fault and the policyholder can provide details of the other driver. Some insurers will not act on or pay a claim until the excess is paid. Policyholders need to read the policy documentation to confirm this requirement. If insurers have recovered payments made under a policy from a third party (the person at fault), a policyholder may be entitled to a partial refund of any excess paid in respect of the claim. Insurance policy renewal Insurers are obliged to contact policyholders and inform them when their policy is due for renewal. Policyholders will receive a renewal statement that sets out the same information contained in the insurance schedule with details of the new premium. Check to ensure the cover is still suitable for your situation. If your premium is automatically paid from your account, your policy will renew automatically. Otherwise, you need to pay the premium to renew your cover. General advice Buying insurance over the phone or internet may be quick and convenient; however, consumers need to ensure that the cover meets their needs. Cheap premiums mean reduced cover. Also, before you submit any personal information to an insurer, look for a security policy to ensure that any communications between you and the insurer are reasonably protected from third parties. Also, set your internet browser to notify you when you leave a secure connection. The Insurance Code (pt 6) requires insurers to ensure communications are in plain language. Pressure selling is prohibited. If an insurer cannot provide cover, they are required to give reasons and to tell the consumer the information they relied on when assessing the application. It is important that policyholders read and retain all correspondence and documentation provided to them by insurers. Policyholders should also keep copies of any paperwork they complete. Policyholders should keep their insurer informed of changes to their situation. For example, if you are proposing to renovate your home, notify your home insurer. Modifications to your motor vehicle should be disclosed to your car insurer. Also, tell your insurer if you change bank accounts or contact details. Cover note It is not unusual for consumers to require insurance at short notice. A common example is the purchase of motor vehicle insurance where the consumer wishes to take delivery of the motor vehicle before any insurance paperwork can be completed. In these circumstances, insurers will issue a cover note. Cover notes are usually issued over the telephone and despite the absence of any paperwork or documentation, they represent legally binding insurance policies. The IC Act refers to cover notes as ‘interim contracts of insurance’. Section 38 of the IC Act provides that if before the cover note has expired the policyholder has submitted a proposal, then the insurer shall remain liable under the cover note until either the insurer or some other insurer issues insurance cover (or another cover note), or the cover note is cancelled, or a consumer withdraws their proposal, whichever occurs first. It follows that consumers arranging a cover note should make written notes of the cover note details provided by the insurer. You may need to rely on these notes if you wish to claim on the cover note before the cover note is confirmed in writing by the insurer. Extent of cover With the exception of life and accident policies, insurance policies are contracts of indemnity. In