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The General Insurance Code of Practice (the Code) requires insurers, and other industry participants, who have adopted the Code to provide services to their customers in an open, fair and honest way. The Code’s standards apply to many features of a customer’s relationship with their insurer including when buying insurance, what to expect when making a claim, including timeframes for making a claim decision, and processes for making complaints. The Code also requires insurers to provide assistance to individuals who are in financial hardship and having difficulty meeting their financial obligations to an insurer. This includes: In such cases, the Code sets out hardship and debt collection standards for general insurers and their agents to follow. The Code is owned and published by the Insurance Council of Australia and forms an important part of the broader financial services consumer protection framework. The latest version of the Code is effective from 1 July 2021. General Insurance Code of Practice The General Insurance Code of Practice covers many aspects of a customer's relationship with their insurer, from buying insurance to making a claim, to providing assistance to those experiencing financial difficulty including uninsured third parties. General insurance products covered by the Code include: Personal Classes Commercial Classes Accident & Sickness Business Consumer Credit Contractors All Risks Home Primary Industries Motor Industrial Special Risks Personal & Domestic Property Liability Residential Strata Motor Travel Other commercial products The Code does not apply to: Code subscribers are listed on the Insurance Council of Australia’s register of general insurers and Lloyd’s Australia Limited coverholders and claims administrators. The General Insurance Code Governance Committee (CGC) independently monitors the Code to ensure companies are meeting their obligations, and achieving service standards consumers can trust. The Code Compliance and Monitoring team (Code Team) at the Australian Financial Complaints Authority (AFCA) provides code monitoring, secretariat and administrative services to the Committee. The Code Team is a separately operated and funded business unit of AFCA. Find out more about the Codes of Practice. The role of the General Insurance Code Governance Committee is to ensure companies that have adopted the General Insurance Code of Practice comply with it. It does not provide compensation. If you are seeking compensation, talk to your financial firm or make a complaint with AFCA. If you believe a company may have breached the General Insurance Code of Practice, you can report your concern by emailing the Code Team or calling 1800 931 678.
The General Insurance Code of Practice was introduced in 1994 by the Insurance Council of Australia as a voluntary Code and it has been regularly reviewed and updated. It sets out the standards that general insurers must meet when providing services to their customers, such as being open, fair and honest. It also sets out timeframes for insurers to respond to claims, complaints and requests for information from customers. The Code is intended to be a positive influence across all aspects of the general insurance industry including product disclosure, claims handling and investigations, relationships with people who are experiencing vulnerability, and reporting obligations.
Most people have some kind of insurance: for their car, their house, or even their life. Yet most of us don’t stop to think too much about what insurance is or how it works. Put simply, insurance is a contract, represented by a policy, in which a policyholder receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured. Insurance policies are used to hedge against the risk of financial losses, both big and small, that may result from damage to the insured or their property, or from liability for damage or injury caused to a third party.
A multitude of different types of insurance policies is available, and virtually any individual or business can find an insurance company willing to insure them—for a price. The most common types of personal insurance policies are auto, health, homeowners, and life. Most individuals in the United States have at least one of these types of insurance, and car insurance is required by law. Businesses require special types of insurance policies that insure against specific types of risks faced by a particular business. For example, a fast-food restaurant needs a policy that covers damage or injury that occurs as a result of cooking with a deep fryer. An auto dealer is not subject to this type of risk but does require coverage for damage or injury that could occur during test drives.
To select the best policy for you or your family, it is important to pay attention to the three critical components of most insurance policies: deductible, premium, and policy limit. There are also insurance policies available for very specific needs, such as kidnap and ransom (K&R), medical malpractice, and professional liability insurance, also known as errors and omissions insurance. When choosing a policy, it is important to understand how insurance works. A firm understanding of these concepts goes a long way in helping you choose the policy that best suits your needs. For instance, whole life insurance may or may not be the right type of life insurance for you. Three components of any type of insurance are crucial: premium, policy limit, and deductible. A policy’s premium is its price, typically expressed as a monthly cost. The premium is determined by the insurer based on your or your business’s risk profile, which may include creditworthiness. For example, if you own several expensive automobiles and have a history of reckless driving, you will likely pay more for an auto policy than someone with a single midrange sedan and a perfect driving record. However, different insurers may charge different premiums for similar policies. So finding the price that is right for you requires some legwork. The policy limit is the maximum amount that an insurer will pay under a policy for a covered loss. Maximums may be set per period (e.g., annual or policy term), per loss or injury, or over the life of the policy, also known as the lifetime maximum. Typically, higher limits carry higher premiums. For a general life insurance policy, the maximum amount that the insurer will pay is referred to as the face value, which is the amount paid to a beneficiary upon the death of the insured. The deductible is a specific amount that the policyholder must pay out of pocket before the insurer pays a claim. Deductibles serve as deterrents to large volumes of small and insignificant claims. Deductibles can apply per policy or per claim, depending on the insurer and the type of policy. Policies with very high deductibles are typically less expensive because the high out-of-pocket expense generally results in fewer small claims.
There are many different types of insurance. Let’s look at the most important. With regard to health insurance, people who have chronic health issues or need regular medical attention should look for policies with lower deductibles. Though the annual premium is higher than a comparable policy with a higher deductible, less expensive access to medical care throughout the year may be worth the tradeoff. Homeowners insurance (also known as home insurance) protects your home and possessions against damage or theft. Virtually all mortgage companies require borrowers to have insurance coverage for the full or fair value of a property (usually the purchase price) and won’t make a loan or finance a residential real estate transaction without proof of it. When you buy or lease a car, it’s important to protect that investment. Getting auto insurance can offer reassurance in case you’re involved in an accident or the vehicle is stolen, vandalized, or damaged by a natural disaster. Instead of paying out of pocket for auto accidents, people pay annual premiums to an auto insurance company; the company then pays all or most of the costs associated with an auto accident or other vehicle damage.
Life insurance is a contract between an insurer and a policy owner. A life insurance policy guarantees that the insurer pays a sum of money to named beneficiaries when the insured dies in exchange for the premiums paid by the policyholder during their lifetime. Travel insurance is a type of insurance that covers the costs and losses associated with traveling. It is useful protection for those traveling domestically or abroad. According to a 2021 survey by insurance company Battleface, almost half of Americans have faced fees or had to absorb the cost of losses when traveling without travel insurance.
Insurance is a way to manage your risk. When you buy insurance, you purchase protection against unexpected financial losses. The insurance company pays you or someone you choose if something bad happens to you. If you have no insurance and an accident happens, you may be responsible for all related costs.
There are four types of insurance that most financial experts recommend everybody have: life, health, auto, and long-term disability.
Depending on the type of life insurance policy and how it is used, permanent life insurance can be considered a financial asset because of its ability to build cash value or be converted into cash. Simply put, most permanent life insurance policies have the ability to build cash value over time. Insurance is a contract in which an insurer indemnifies another against losses from specific contingencies or perils. It helps to protect the insured person or their family against financial loss. There are many types of insurance policies. Life, health, homeowners, and auto are the most common forms of insurance. |
Which of the following best describe the function of insurance?
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