Four steps to appeal a rejected insurance claim

Few things are more devastating in business than thinking you’re covered for a loss only to find out your insurer has rejected your claim. Here’s how to appeal that decision.

Just because you’ve received bad news, doesn’t mean you should give up.

There are a number of avenues for appealing such a decision, and a good broker can be your best ally.

How you appeal a rejected insurance claim depends on the nature of the rejection, which usually comes down to one of two things.

“It’s either rejected because it doesn’t fall within the operative clause or an exclusion applies. So that’s a wording type issue,” says Steadfast’s Broker Technical Manager, Michael White.

“Or it might be a factual issue.”

White provides the example of a rejected claim for storm damage to a property – the owner may claim that damage was the result of a storm, while the insurer argues that the damage is caused by gradual deterioration.

“It’s hard to believe, but lots of people make claims when they don’t actually have insurance,” says White. “Or they’ve insured their business but they haven’t insured themselves for theft or business interruption.”

1. Broker advocacy

If your claim is rejected, your broker can be your advocate.

“You should be getting the broker’s opinion on whether there’s any grounds on which you can challenge the rejection,” says White.

If the rejection is based on a factual issue your broker may be able to help secure competing factual evidence, reports and documentation.

“For example, the insurer is going to rely on the building report – they don’t actually go out and look at these things themselves – so you could consider getting another building report,’ White says.

If the rejection is based on an exclusion, a Steadfast broker can reach out to White for his technical expertise.

“I’ll tell them whether they’ve got a grounds for arguing it or not,” he says.

2. Internal dispute resolution

If your broker can’t get the insurer to overturn the decision, the next step is requesting your insurer launch a formal internal dispute resolution process.

The internal review structure varies between insurers, but all are legally required to review the decision within 45 days. In some instances, they may choose to overturn their original decision based on a fresh look at the claim.

If not, they must give reasons why they have rejected your claim.

“Again, your broker can be your advocate throughout this process,” says White.

3. External dispute resolution

If the outcome of the internal dispute resolution process is unsatisfactory you then have every right to pursue an external scheme.

From 1 November 2018, the Australian Financial Complaints Authority will handle disputes over rejected insurance claims. If you’re making a complaint before 1 November 2018, it should be lodged with the Financial Ombudsman Service Australia. Thereafter the Australian Financial Complaints Authority will be handling disputes.

However, these bodies only have jurisdiction over certain insurance products and require other criteria to be met. Here is what’s within the scope of FOS and AFCA.

4. Court proceedings

For insurance matters that do not fall within the jurisdiction of FOS or AFCA, your final recourse is to launch legal proceedings.

“The final option is pursuing the matter in court or, depending on what state you’re in, you’ve got the Fair Trading Tribunal,” White says.

No claim without cover

While the steps we’ve outlined above may very well help you overturn an insurer’s initial negative decision, there’s very little that can be done if you don’t have appropriate insurance in the first place.

“It’s hard to believe, but lots of people make claims when they don’t actually have insurance,” says White. “Or they’ve insured their business but they haven’t insured themselves for theft or business interruption.”

Contact us for expert advice on insuring against the risks your business faces.

Important note – the information provided here is general advice only and has been prepared without taking in account your objectives, financial situation or needs. 

5 tips for insuring a shopfront

When you’re ready to push your home business from the nest and into a shopfront, it’s an exciting time. It can also expose you to a whole new world of risk that could cripple your fledgling business before it can soar.

Running a business from home is one thing, but taking the leap to a shopfront is altogether another. Fortunately, as millions before you have proven, it can be done.

But not only does it require planning, budgeting and a solid understanding of the risks you’ll face, it also requires you to take out the right insurance, says John Clark, Steadfast’s Broker Support Manager.

“If you have a computer that has your records on it and they’re not backed up properly, then you’re risking interruption to your ‘from home’ business that you can’t easily deal with”

1. Theft

First cab off the rank is ensuring you have adequate security measures in place to protect the equipment, stock and cash within your new premises.

Depending on what’s most suitable for your business, that could include a safe, bars on windows, a security guard or advanced alarm systems.

It’s also worth considering insurance against theft and property damage.

“What happens in most burglaries is that, not only do they come in and take stuff, but they damage things” Clark says.

2. Fire

No one wants to see their dreams go up in smoke.

Not only do you need to identify fire risks within your business, such as electric radiators, but you should install fire extinguishers and smoke alarms.

Speak to an experienced broker about appropriate insurance and backup all your business documents and files off-site.

If you have a computer that has your records on it and they’re not backed up properly, then you’re risking interruption to your ‘from home’ business that you can’t easily deal with” says Clark.

3. Public liability

Let’s say someone strolls into your store and trips over something you’ve accidentally left on the floor, injuring themselves badly in the process.

“She’s on a big income so she sues you for $200,000. What do you do then? You’d need Public Liability insurance” says Clark. “All those exposures should be fleshed out when you talk to a broker, and an appropriate insurance solution found.

4. Business interruption insurance

Whether it’s a roof-raising storm, a wall-shattering earthquake or a car through your shop window, it’s important to help protect your business against things that can suddenly and unpredictably bring your income stream to a halt.

“If you’re an owner/operator or a single tradie, how would you pay your expenses – the rent, the wages, the electricity – without an income?” he asks. “That’s why you need Business Interruption Insurance.

5. Ask an expert

While you can always take steps to mitigate against worst case scenarios, the fundamental risk mitigation strategy is to have an expert review your insurance and ensure it is appropriate.

“That helps transfer the risk from you to the insurance company” Clark says “and underscores the importance of seeking the advice of an experienced broker

If you’re ready to make the move to a shop of your own, consult your local Steadfast broker to ensure you’re covered.

Important note – the information provided here is general advice only and has been prepared without taking in account your objectives, financial situation or needs.

What insurance terms mean

A lack of understanding around what insurance jargon refers to could cost you dearly. Here are some industry terms and concepts you should be clear about before signing anything.

Insurance is a contract (i.e. a legally enforceable agreement) between two or more parties. It typically involves an individual or business paying premiums to transfer specific risks to an insurer. If something does go wrong, the insurer then has to pay for, say, a burnt-down shop to be rebuilt.

So far, so simple. However, as is the case with most contracts, insurance policies are complicated. To understand how they work you should, at a minimum, get familiar with the following.

Key insurance terms

Product disclosure statement: In certain types of insurance, such as home and motor, your insurer needs to provide you with a product disclosure statement. As well as the insurer’s contact details, this sets out the significant benefits, cost, terms and conditions, cooling-off period and dispute-resolution process relating to the policy they are offering.

Duty of Disclosure: When you take out an insurance policy, renew a policy or vary it, you have a duty to disclose to the insurer every matter that you either know or a reasonable person in the circumstances could be expected to know are relevant to the insurer whether to accept the risk and if yes, on what terms. You can’t, for example, be diagnosed with a terminal illness and then apply for a life insurance policy while keeping the diagnosis secret.

Agreed value/Market value: Let’s say you purchase a motor vehicle, costing $20,000 for your business. You’ll have the option of insuring the vehicle for either agreed or market value. Agreed value means you and the insurer agree to a set sum (for example, $20,000) being paid out in the event of a successful claim.

Market value means the insurer will only pay out what they would currently be worth in the market. If the vehicle is stolen three years after being purchased, the pay-out might only be $16,000.

Excess (also known as deductible): To discourage claims, especially for minor losses, and to reduce premiums insurers use a carrot (no-claim bonuses) and a stick (an excess). In the above example, the insurer might insist on an excess of $500 on the vehicle. That way, if the vehicle is damaged, the business owner out of their own pocket pays for the first $500 of the cost of repairs. Policies with larger excess are cheaper. That’s because you’re less likely to make a claim and will get a relatively lower pay-out when you do.

Compulsory insurance: While businesses often have the choice to insure against risks or take their chances, some insurance policies are legally required. For example, workers’ compensation insurance is compulsory for any business owner who has employees. Likewise, professional liability is compulsory for professionals in many occupations.

Exclusion: This is a clause in the policy which sets out the circumstances in which an insurer will not be liable for a claim under the policy. For example, a motor vehicle policy may exclude cover for the theft of a vehicle if the keys were left in the ignition. Failing to be aware of exclusions in an insurance policy is a common and often costly mistake.

Period of cover: The period for which an insurer agrees to cover you, usually a year.

Waiting period: Some types of insurance, such as income protection, require the individual making a claim to support themselves for a period of time (until a lump-sum payment is made or recurring monthly payments start). If money is tight, you can lower premiums by agreeing to a longer waiting period.

Benefit period: This refers to the period of time in an income protection policy in which an insurer will pay out if you suffer a loss covered by the policy. For example, some income protection policies pay out for one year, others until retirement age. Again, a cost-benefit trade-off needs to be made; the longer the benefit period, the more expensive the policy will be.

General Insurance Code of Practice: People often worry an insurer will take their money but try to wriggle out of providing a pay-out if they make a claim. However, insurers must abide both by the law and a code of practice developed by the Insurance Council of Australia. If you have issues with an insurer (or are worried you might), you should read the code.

“Australia is one of the world’s most underinsured first-world nations. Australian SMEs owners don’t appear to be any less blasé than their non-business-owning compatriots.”

Underinsurance: This can refer to one of two things:

  1. Having no insurance at all. Most businesses do not take business interruption insurance, meaning that they cannot claim economic losses when the business has to close down for some reason.
  2. A policy that doesn’t cover the value of what is being insured. For example, if you insure a building and the replacement cost of the building is $2 million but you only insure for $1 million, if the building is burnt down, you can only recover $1 million. If the building is damaged but can be repaired for less than $1 million, the insurer may be able to reduce any payment to reflect the underinsurance. This is to encourage you to insure for full value and pay the right premium.

Australia is one of the world’s most underinsured first-world nations. Australian SMEs owners don’t appear to be any less blasé than their non-business-owning compatriots.

Still feeling confused?

Fortunately, it’s possible to outsource the task of checking whether your policies offer either agreed or market value or have any unreasonable exclusions to an insurance broker (i.e. an intermediary, who acts on behalf of you in applying for insurance).

If you need expert advice on whether your policies are providing the cover your business needs at a fair price, contact us and we will be happy to speak with you.

A Business Saviour – Business Interruption Insurance

Businesses close their doors for many reasons, sometimes for a short time, often for good.

When faced with fire or storm damage or any insurable event that stops a business from trading, the owner is back in control if they know the likely claims outcome; what the policy covers; how much the policy will pay and when it will be paid.

A Business Interruption (BI) Policy tells the business owner up-front.

Insurance brokers take the time to understand the client’s business, its risks and exposures and then combine know-how, experience and market conditions to deliver a policy to suit the needs of the owner and his or her business.

This means no confusion and no uncertainty at claim time. The business owner knows up-front exactly how much the policy pays and when it will be paid.

If you’ve had a BI policy for a few years, it needs updating. If you don’t have one at all, you should consider the protection of a Business Interruption Policy. It’s the inexpensive way to protect your business income, the lifestyle of you and your family; and employment continuity for valued employees.

Valuables and Collectibles insurance. Valuation updates now due?

When was the last time you had your jewellery valued? And what about that fine art collection in your home or office boardroom? Whether you have the odd piece or a truckload, chances are your precious items are worth a lot more than you think.

Fine art is not just limited to paintings and works on paper. All manner of Collectibles fall under this heading, including sculptures, porcelain, jade, photographs, tapestries, sports and other memorabilia, vintage clothing, antiquarian books and manuscripts, antiques, stamps, coins, vintage clocks, finely crafted musical instruments and wine.

Like any other item of value, it’s important that your Collectibles are properly covered in case of theft, fire or other misfortune. Although no amount of money may replace your prized collection, it can help you to rebuild it. First and foremost, insuring your collection involves talking to your broker. Find out whether or not your precious items are covered under your current policy and if not, how best to get proper cover.

You’ll need the services of a professional valuer to assess and confirm a true value but their fee will prove to be negligible in the event of an insurable event further down the track, especially if your collection is of significant value. A written appraisal will prove the worth of your valuables.

Your policy may require you to photograph and/or video your entire collection but do it anyway, it will make a future claim an easy process. If possible, make sure that the date stamp is imprinted on the photo(s) or displayed on the video. This will help to prove the authenticity of the images if necessary in the future. Include images of yourself wearing the jewellery or show an art piece in-situ in your home or office

As a final step to documenting your collection, take a written inventory of each piece, including a detailed description. Once you have all of the necessary paperwork and information gathered store the appraisal, your insurance policy and any written, photographed or video documentation relating to your collection in a safe place easily accessible by you, your family or associates.

While the documenting process may seem like a lot of work now, it will prove to be worthwhile if an event results in the loss of your collection. You may never need to make a claim but the process will provide you with great peace of mind just knowing that it is there.

Insurance and contractors: have you got it covered?

Hiring a contractor or sub-contractor is often appealing to time-poor, cash-strapped small business owners. One big reason is that they take care of their own insurance (as opposed to the business owner having to provide coverage for them, as is the case with employees). But what if things aren’t quite that straightforward?  

Imagine the following scenario. You hire a plumber to fix a leak at your workplace. He solders a pipe and your building catches fire. What was a $200 job results in $1 million in damage. You go after the plumber only to discover he doesn’t have the right (or any) insurance or assets you can get your hands on. If you have the right property insurance you may receive a pay-out. But what if it only covers you up to $500,000? Chances are you’ll be left with a shortfall and that could sink your business.

“It’s crucial for small businesses to check that contractors and sub-contractors have their own insurance in place. You should request a copy [of the policy]”, says John Clark, Steadfast Broker Support Manager.

What policy? Well, that depends on the job but a humble suburban tradesman will often have contract works, public and products liability, professional indemnity and workers’ compensation insurance. Err on the side of caution when checking that any contractors or sub-contractors you use show you all the relevant policies to provide proof, so you are unlikely to be left on the hook if they, or one of their team, starts a fire or falls over and breaks a leg.

” It’s crucial for small businesses to check that contractors and sub-contractors have their own insurance in place. “

Employee or sub-contractor?

It’s a question that causes confusion but one that business owners need to be clear about to avoid insurance issues in a worse-case scenario.

In theory, an employee works in the business while sub-contractors run their own business and supply a service. For example, the wait staff at a restaurant are likely to be employees while the person who cleans it (and provides similar cleaning services to other restaurants) is likely to be a contractor or sub-contractor.

In practice, the lines can blur. For example, a person can be a contractor for tax purposes but still be deemed an employee when it comes to workers’ compensation insurance. If someone a business owner thinks is a sub-contractor can be classified as an employee (under any circumstances), that business owner has a lot more liability than they realise, should anything go wrong.

Each state and territory has its own rules around the demarcations between employees and contractors/sub-contractors for workers’ compensation, so checking the relevant websites is a good place to start. Then seek legal advice if you’re worried you might have an employee on your hands rather than a contractor or subcontractor.

Workers’ compensation and public liability

Workers’ compensation insurance is compulsory for all employers in Australia to protect employees if they suffer a work-related injury or illness. The same goes for sub-contractors who hire workers to help with a job. “If you employ people, get advice as to your workers’ comp obligations in your state or territory,” says Clark.

So, what should you look out for?

As with most things business – related, it’s always best to get it in writing. That is, have any contractors or sub-contractors you use sign a contract before they step foot on the premises. Contracts need to be properly drafted and spell out the chain of liability, to give both parties legal protection. All parties – employers, contractors and sub-contractors – should pay special attention to indemnity clauses that can shift all liability for death, injury or loss onto them.

“People often rush in and sign a contract without looking at it carefully. If you go on to make a claim your insurance might not cover you because you signed something you shouldn’t have,” says Clark.

One common but important exclusion is contractual liability. This can exclude insurance cover if you sign a contract that reduces your rights to less than they normally would be at common law (for example, if you agree in a contract not to sue a contractor for their own negligence).

If you’re an employer or sub-contractor who wants some expert guidance about insurance matters, talk to a Steadfast insurance broker today.

Workers’ compensation is everyone’s business

Business owners are required to navigate the complex world of workplace safety. Here’s some things you need to know to ensure your business is compliant.

Injury in the workplace

Illness or injury in the workplace is more common than you might think. No matter what industry you’re in, it’s an area of running a business that can’t be ignored.

The statistics speak for themselves. There were 106,565 serious workers’ compensation claims in 2013/14, which equates to 5.9 serious claims per million hours worked, according to Australian Workers’ Compensation Statistics data from Safe Work Australia. The economic cost of work-related incidents in 2012/13 was $61.8 billion, statistics show.

The three industries with the highest number of serious claims per million hours worked were transport, postal and warehousing (9.3%), healthcare and social assistance (8.7%), and agriculture, forestry and fishing (8.6%) in 2013/14.

Most of the injuries during this time were musculoskeletal disorders, which led to 90% of serious claims – the most common were traumatic joint/ligament and muscle/tendon injuries (45%). While claims are down on previous years, businesses still need to be prepared, just in case.

“ Wise employers foster a health and safety culture within the workplace “

Protect your business

The onus is on Australian business owners to navigate the complex world of workplace safety, which includes understanding workers’ compensation requirements. Workers’ compensation insurance is compulsory for business owners in all states and territories.

” Workers’ compensation insurance is compulsory for business owners in all states and territories. “

This form of insurance pays employees if they are injured at work or become sick due to their work. The payment can cover their wages if they’re not fit to work, medication expenses and rehabilitation.

Employers are responsible for taking reasonable steps to ensure that the workplace is a safe working environment, which extends to events where employers are technically off the clock, such as work Christmas parties.

Uninsured employers may still be able to claim for workers’ compensation benefits for staff in case of injury or illness, so check with your local authority. There’s lots of great information on the Safe Work Australia site.

Each state and territory has independent regulators and administrators in place to run workers’ compensation, so make sure you become familiar with your local authorities. The rules while similar differ between each state and territory

Managing risks

Wise employers foster a health and safety culture within the workplace, providing regular communication around safety and injury management to raise awareness among staff.

This process includes encouraging staff to identify potential injury or illness threats, and being sure to address these issues immediately. Rewarding positive contributions to health and safety in the workplace can also have a significant impact on the cultural change within an organisation.

Taking immediate action after an incident to minimise effects and make sure people are supported is paramount.

Make sure your workplace has emergency response plans for evacuations and medical response systems in place. Be sure to conduct an investigation to understand how the incident occurred and document everything, including taking photos of where the incident occurred and then take steps to prevent it from happening again.

The steps to planning ahead

Efficiently managing work health and safety risks within a workplace means having a systematic approach, which involves five key elements. These are:

  1. Governance: Ensure your workplace has the organisational framework, procedures, policies and processes in place
  2. Prevention: Develop specific hazard policies and procedures for your workplace
  3. Response: If a safety incident takes place, you must take steps to remove the hazard that caused it, and implement changes to stop it from happening again
  4. Managing hazards: An effective risk and hazard management methodology will allow you to identify hazards that pose a risk to your workers and resolve them before they cause injury or illness
  5. Recovery: Where a worker has been injured, the employer has responsibilities to put in place a rehabilitation management system for workplace injury or illness

Source: Comcare.gov.au

Tips to foster a health and safety culture:

  • Clear communication: The flow of information ensures everyone knows what’s expected of them and what they can expect at work. That means the work gets done safely
  • Talk it up: Enthusiasm about health and safety will save you money in the long run
  • Reduce risk of injury: Think, plan and invest in systems to reduce the risk of injury to keep workers safe

Source: Safe Work Australia and South Australian firm, Williams Seafoods

This is an area of business that’s important to take seriously. Even if you’ve dealt with this area of your business six months ago, it’s important to revisit safety issues regularly, so make sure you schedule regular audits, and include your staff in the process.

For more information and tailored advice, speak to your Steadfast insurance broker who can advise you on your workplace health and safety risks.

insurance renovating home

Home insurance cover at risk when renovating

Renovating an existing dwelling rather than buying or building a new one has become the

popular option for an ever-increasing number of homeowners.

 

For those who are considering serious home improvements it’s important to know that

your home policy covering the dwelling and contents may fall short of the cover required

whilst building work is being undertaken.

 

Insurers accept the risk of a home insurance policy on the assumption that it is:

  • An intact building,
  • Will not have part or all of its roof removed.
  • Will not have some of its stumps or part of the foundations temporarily weakened
  • or removed.
  • Will not have any of the external walls opened or removed.

Depending on the Insurer and their policy wording, you may find that the cover on your

home is limited to some extent whilst alterations and additions are being carried out.

 

Before commencement of renovation work it is advisable to obtain the precise details of

your builders insurance as it affects you. It’s also recommended that you contact us so

that changes, if required, can be made to your existing insurance to accommodate the new

circumstances.