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Short-term insurance claims can be a minefield, and most people will have a tale of woe to tell about a claim gone wrong. There are a number of reasons why policyholders encounter problems when submitting claims to their Insurer. One of them is that they are ignorant of their obligations under the insurance contract.
As a policyholder you have to ensure that your Insurer has all material information concerning the risk they are required to insure. Once the Insurer has accepted the application and the first premium has been paid, the Insurer is said to be “on risk”.
However, you have a duty to take preventative measures for reasonable loss. Failure to comply, and evidence of total disregard for this requirement, may lead to a claim repudiation. So what is reasonable loss? Simply put, you should always act as if you were not insured. The existence of insurance should not change your behaviour and treatment towards your possessions.
Problems can also stem from changes in the risk factors effected by you, but without notifying the Insurer. Be on the lookout for any specific policy requirement to notify the insurer of an alteration, especially if it increases the risk originally described in the application.
Another area of concern is obligations arising at renewal of cover. Remember that when you renew your policy, usually every 12 months, it constitutes a fresh contract. The new period of insurance is therefore unrelated to the previous period. Although you may not be asked to complete a new application form, if you stay with your existing Insurer, you will certainly have to advise them of new circumstances or information, which affects the risk. At the same time your sums insured should be reviewed and adjusted where necessary.
There are also obligations with regard to claims procedure: Correct completion of claim forms, submission of proof thereof and delays in obtaining settlement, presents the greatest difficulties.
Here are some important rules to follow:
- If your loss is crime related you should immediately notify your nearest police station. In the event of a fire also notify your nearest fire station. Make a note of the date, time and name of the person you spoke to and obtain a report reference number.
- Notify your Insurer, or your broker, of the loss event. Note the date, time and name of the person spoken to and request a claim form.
Do not make any written statements and never sign documents especially blank ones until you have sought advice.
- If a third party is involved, do not admit liability or promise to make any payments.
- Even if you’re unsure of whether you are covered by your insurance, act as if you are and then obtain advice from an independent claims consultant.
As with many insurance products a little knowledge can really make a difference.
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