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.

What insurance cover does a growing business need?

One of the drawbacks to owning a growing business is having more at stake. An expanding business is likely to be having dealings with an ever-increasing number of individuals, getting involved in a wider range of commercial activities, even expanding into new locations.

A growing business usually requires a growing workforce. With more equipment and larger premises come more expensive rent payments. In such circumstances, any revenue-disrupting interruption to its activities can soon escalate into a cashflow crisis.

In short, the cover that was sufficient when you were a sole trader or running a scrappy start-up isn’t likely to be adequate once you’re heading up a thriving enterprise. The end of the financial year is a great time to think about how your business has changed over the last 12 months and review your insurance policies. If you’re pressed for time or simply want the reassurance of an expert opinion, a Steadfast Insurance broker can assist you.

Employers’ liability insurance

When it comes time to make your first employee hire, you’ll be legally required to take out workers’ compensation insurance. You should consider taking out a form of back-up workers’ compensation insurance called employers’ liability insurance. This is because it’s possible for an employee to suffer an illness or injury that is job-related yet not covered under a standard workers’ compensation policy (employers’ liability insurance can cover for these type illnesses, injuries and fatalities.) Even if it’s not a legal requirement, to be an employer of choice, you could have employers’ liability insurance as an additional benefit if you want your employees to have better cover in the event of an employee suffering a misfortune.

Directors’ and officers’ insurance

A growing business will inevitably become more hierarchical and possibly move from a sole trader or partnership business structure to a company one. In any largish enterprise, there are individuals – executive directors, non-executive directors, executive officers, senior managers and the company secretary – who shoulder important responsibilities.

Understandably, these people don’t want to be placed in a position where they could suffer personal financial loss as a result of doing their job. By providing directors’ and officers’ insurance, a business owner can provide cover to key staff and board members. That means they can be reimbursed for their legal costs if competitors, creditors, employees, liquidators, regulators or shareholders take legal action against them.

Business interruption insurance

The more your business grows, the larger its fixed costs are likely to be and the more expensive an interruption to its smooth functioning will become. A suburban café may only be out of pocket a few hundred dollars if a blackout means it has to shut down for the afternoon. In contrast, it’s estimated Starbucks’ recent decision to close its US stores for an afternoon (to provide racial-bias training to staff) cost around US$12 million (A$16 million).

If an unfortunate event means you need to shut up shop, your revenue will typically be severely impacted during the shutdown period. Nonetheless, you’ll probably continue to face the usual wage, rent and other business costs. As explained more fully here, business interruption insurance can provide a pay-out to cover you for those costs, as well as make up for lost sales.

Cyber insurance

In the digital age, an IT issue can be as devastating as any fire, flood or storm. The two threats businesses, especially smaller ones with limited IT budgets, most need to worry about are ransomware attacks and data theft.

A ransomware attack results in a business’s files being encrypted. Important data is rendered inaccessible, which can make it difficult or impossible for a business to keep operating – until a ransom is paid to return things to normal. It’s estimated that, globally, ransomware inflicted US$5 ($A6.5 billion) of damage in 2017.

Governments in Australia and elsewhere are tightening privacy regulations and stiffening financial penalties for data breaches. If a malicious actor overcomes your cyber security and captures your customers’ personal data, the consequences can be more serious than brand damage. You could find yourself being investigated by the government regulator and being sued by your customers. As explained more fully here, cyber insurance can help cover financial losses arising from a cyber security breach

Source: This article was first published by Steadfast Well Covered 
https://bit.ly/2IlCYCB

Risk Insure

Corporate Travel Insurance

If you have employees who are required to travel for work within Australia or abroad  you should ensure that you and they are not exposed to potentially large financial losses as a result of these travels.

Expenses for medical treatment, emergency medical evacuation, flight cancellations, hire car excesses or lost luggage are several common losses that companies can face when their employees are on business trips.

Most firms tend to forget about arranging travel insurance or alternatively arrange a series of single travel policies via their travel agent.

By far the best option to ensure a broader and generally more cost effective cover is an annual corporate travel insurance policy from your insurance broker.

Annual corporate travel insurance policies can be tailor-made to protect your business from all kinds of business travel expenses, including:

  • Personal Injury
  • Medical Expenses
  • Emergency Medical Evacuation
  • Repatriation of Remains
  • Cancellation/Curtailment/Additional Expenses
  • Personal Liability
  • Luggage, Money, Travel Documents
  • Alternative Employee and Additional Expenses
  • Hire Car Excesses
  • Missed Transport Connections
  • Extra Territorial Workers Compensation
  • Kidnap, Ransom & Extortion
  • Political and Natural Disaster Evacuation

If you or your staff travel more than a few times a year on company business then annual corporate travel insurance is for you. That’s because it gives you flexibility and you are covered for every trip without having to remember to apply for a single policy every time.

Please contact our office for more information about the benefits of an annual travel policy for your business.

Risk Insure

Pay your business insurances by the month

Cash flow is the key to survival of any business. Without sufficient cash flow it becomes very difficult for even the most profitable business to avoid financial disaster, or at the very least achieve its true potential.

When economic times are challenging, business leaders should be seeking ways to improve their cash flow and preserve their working capital at every opportunity. One of the easiest ways to do this is by paying your business insurance by the month through a premium funding facility arranged by your insurance broker.

Premium funding companies lend you the amount required to pay your insurance premium and pay it on your behalf. You then repay the premium funding company in monthly instalments over a period of typically 10 months.

The premium funding company charges a flat interest rate on the amount of the premium that is fixed for the term of the loan. And as the loan is secured by the insurance policy in most cases, no security is required. This ensures that applications are simple and processed quickly – usually within 24 hours.

The interest charge is usually tax deductible as a business expense.

Talk to us about preserving your business cash flow with premium funding.

Risk Insure

Cyber-crime: A growing menace

The reality is that all companies, large or small are targets for cyber criminals. Unfortunately many businesses operate under the belief that their existing insurance policies are enough to cover their data security and privacy exposures. This is not the case.

Australian insurance companies however are at the forefront in making good the damage of cyber attacks. Although stopping the hackers and other criminals in their tracks is not within their capability, they are able to provide the next best thing… picking up the financial pieces of damaged businesses following a cyber attack event.

Cyber attack insurance. What can be covered?

Cyber attack insurance can protect you from claims arising from your use of the Internet, email, intranet, extranet or your website. Cover can include but is not limited to:

  • Breach of privacy
  • Damage to your network or website
  • Transmission of a virus
  • Third Party Liability
  • Cyber Extortion

Please contact our office for more information and professional help to implement the right cyber risk protection strategy for your business.

Risk Insure

Why use an insurance broker?

Why use an insurance broker? For the peace-of-mind. That’s why.

There is nothing worse than paying a premium for insurance, then, when you lodge a claim following an insured event, find that you get the runaround from the insurance company and, eventually, a settlement that leaves you well out of pocket.

Buying your business and many personal insurances through a qualified insurance broker has many advantages:

A broker will act on your behalf and provide you with personal advice based on your particular circumstances.

A broker will offer guidance in the selection of your policies.

A broker offers a wider choice from multiple insurers, scheme benefits and discounts as well as expert advice on levels and types of cover that are required.

A broker will provide sum insured calculations, periods of indemnity recommendations and, depending on the size of your asset portfolio, refer you to other specialist services providers such as risk managers, valuers, contractual and legal advisers and even HR specialists.

A broker will stand by you and represent your interests when the time comes to make a claim.

This broker, whose website you are now reviewing, will do all this and more for you. Call us or send an online enquiry to arrange an obligation-free review well before your renewals are due.

You have nothing to lose but stress and sleepless nights.