How to read a PDS and understand the policy – Part 2
We explored the purpose of a Product Disclosure Statement (PDS) as well as some of the most important sections you need to understand in Part 1 of this series. Here, in Part 2, we’ll dive into what you need to do if you don’t fully understand a PDS, as well as some of the consequences that can occur from not reading it.
What to do if you don’t understand a PDS
If you’ve read through (not skim read!) your entire PDS but there are still sections you don’t completely understand, don’t worry! It’s a legal document, and while insurers try to write it using plain English that can easily be understood, sometimes it still might not make clear sense to you. But there are things you can (and should) do about this.
Your first call should be to your insurance provider. Jump on the phone or send them an email and explain your situation. One of their friendly team members will be only too happy to walk you through any sections of the PDS that don’t make sense, and they’ll be able to break down any complicated sections in explanations that are hopefully clearer to you.
Your insurance provider is there to help you and support you with whichever policy you choose, so take advantage of their customer service team and make sure you are completely across everything contained in your policy’s PDS.
The alternative could see you learning you are not covered for something when it comes time to make a claim and having that claim denied.
The consequences of not reading (or not understanding) a PDS
As you might expect, most consumers reckon they’ve considered all the details when buying insurance, when in actual fact, most don’t look into policy exclusions and limits, according to an Insurance Council of Australia (ICA) report.
The PDS is there to serve you, the customer, and clarify exactly what’s included (and excluded) in your policy and under what terms and conditions. So rather than just giving it a quick skim, you should read it from top to bottom. Sure, it might be a bit of a boring and time-consuming read, but it could save you some serious headaches if and when it comes time to make a claim.
The consequences of not reading and understanding your PDS can create problems in the short and long term, including:
- Thinking you’re covered for something when you’re not means your claim may be denied
- Not knowing the claims process may result in delays to your claim being assessed or subsequently have your claim denied
- Not honouring your duty of disclosure, and your insurer finding out you provided incorrect information or omitted information that should have been disclosed, could result in your claim being reduced or denied
- Not knowing your rights or how to complain may give you limited options if you’re dissatisfied with a claim outcome
Bottom line: by reading your PDS, you’ll see and be able to understand exactly what you’re covered for, and more importantly, what you’re not covered for. This can help you find the right level of cover, and give you that warm, fuzzy ‘peace of mind’ feeling knowing you have the policy that’s right for you.
There’s more to understanding a PDS than just reading it
Wait, what? That’s right, there’s more to understanding a PDS than just casting your eyes over the words on the page. In fact, the ICA report shows that while 88% of us are “completely confident” or “mostly confident” about understanding the finer policy details, actual comprehension of policy exclusions and limits is poor.
This is critical no matter what type of insurance you’re after. Think about what you actually need the insurance for. Consider your home; you want to make sure your home and contents insurance policy is perfect for your home, not just any old Aussie home. So, if you read the PDS and still have trouble understanding it in full, there may be a number of other insurer-initiated information sources that can be influential in aiding decision-making, such as a key facts sheet for home insurance. These are tools that are designed to help you.
It’s the same for travelling. You wouldn’t want to purchase coverage for your future three-month trip around Europe that’s actually a generic cover for say, a weekend away in Bali, right? Take the time to pore over the PDS and really get to grips with the finer details, to ensure that what you’re covered for is actually appropriate for your particular situation.
Don’t leave reading your PDS to the last minute
Don’t leave reading your PDS to the last minute; get informed before you make a decision and purchase a policy so you can be confident that you have some protection if the unexpected were to happen.
Remember, the PDS tells you everything you need to know about an insurance policy, so reading it before taking out cover means you’ll know exactly how everything works should you ever need to make a claim.
Now that our two-part series has come to an end, ask yourself: do you really understand your PDS? Can you list off everything you’re covered for in your policy? If not, it might be time to take another look!
And while you’re taking that second looksee, it’s worth reviewing your insurance policy to make sure it’s the right level of cover for your needs. Choosi makes it easy to compare all types of insurance, so call 13 55 5513 55 55 or compare insurance quotes now by heading to the Choosi homepage and hitting the “Compare Now” button.
21 May 2020