Insurance Guide


  • UNINSURED RISKS EXPOSURE Aughtersons Insurance Brokers Pty Ltd

This Insurance Manual has been produced to present a broad outline of Insurances,
Terminologies and General Information to assist you in better understanding various
Insurance policies.
The Insurance Programme set out in your insurance Invoices/Schedule combined
with this guide contains a brief description of individual insurances, but it should not
be treated as a replacement for the relevant policy documents. Each policy should
be carefully read by the Insured and, in particular, note taken of the description in
the policy of the coverage provided as well as the exclusions and policy conditions.
Gil Van der Venne (Aff.A.I.I., Q.P.I.B., DIP.F.S (Brok),CIP) Managing Director
Dale Collins (ANZIIF (Snr Assoc),Q.P.I.B,CIP) Partner/ Account Manager
Tim Burton Assistant Account Manager
Sarah Farmer Assistant Account Manager
Andrew Ramsden Authorised Representative
Kerry Van der Venne Administration Aughtersons Insurance Brokers Pty Ltd

Please read these notices carefully. If there is anything in them that you do not
understand or if you would like any further information, please contact us.
You and everyone who is insured under your policy must comply with the duty of disclosure.
Make sure you explain the duty to any other insured’s you apply on behalf of.
The duty requires you to tell the insurer certain matters which will help it decide whether to
insure you and, if so, on what terms. The duty applies when you first apply
for your policy and on any renewal, variation, extension or replacement of the policy.
The type of duty that applies can vary according to the type of policy.
If we act on your behalf, to assist us in protecting your interests, it is important that you
tell us every matter that:

  •  you know; or
  • a reasonable person in the circumstances could be expected to know, is relevant to the

insurer’s decision whether to insure you and, if so, on what terms. We will then assist you in
determining what needs to be disclosed to the insurer in order to meet your duty.
If we act on behalf of the insurer, you need to refer to the policy which will set out the
duty that applies.
When you answer any questions asked by the insurer, you must give honest and complete
answers and tell the insurer, in answer to each question, about every matter that is known to
you and which a reasonable person in the circumstances could be expected to have told the
insurer in answer to the question.
Examples of matters that should be disclosed are:

  • any claims you have made in recent years for the particular type of insurance;
  •  refusal by an insurer to renew your policy;
  • any unusual feature of the insured risk that may increase the likelihood of a claim.

If you (or anyone who is insured under the policy) do not comply with the duty, the insurer
may cancel the policy or reduce the amount it pays in the event of a claim. If the failure to
comply with the duty is fraudulent, the insurer may treat the policy as if it never existed and
pay nothing.
Many policies do not cover the interests of third parties (e.g. co-owners, lessor(s) and
mortgagees) whose interest is not noted on the policy.
If you require the interest of any third party to be covered, please let us know, so that
we can ask the insurer to note that party’s interest on the policy. Aughtersons Insurance Brokers Pty Ltd

Many policies that cover loss of or damage to property contain what is called an
“average clause” which, if you are under-insured, may reduce the amount of cover
under the policy.
Briefly stated, an average clause provides that where the amount of the loss or
damage is greater than the sum insured under the policy, the insurer is only liable to
pay a proportion of the loss or damage. In effect, you are treated as if you self-insured
a part of the risk.
If your policy contains an average clause, please read it carefully to see how it affects
the amount of cover under the policy.
If your policy provides “new for old” cover, please ensure that the sum insured is the
cost of replacing the lost or damaged property with new property.
Many policies exclude or limit the insurer’s liability if you have entered, or enter, into an
agreement that excludes or limits your rights of recovery against third parties whose acts,
errors, omissions or other conduct have caused or contributed to your loss or liability. (These
are often called “hold harmless” agreements.)
If you have entered, or consider entering, such an agreement, please let us know, so that we
can advise you about how the agreement affects, or will affect, your cover.
Many policies require you to notify the insurer in writing of any material change to the
insured risk during the period of insurance. The insurer can then decide whether to
cover the new risk.
Some examples of material changes are:
• if you change your profession or occupation;
• if you acquire or merge with another business;
• if you commence manufacturing plastics, or commence woodworking activity;
• if you commence manufacturing a new kind of product;
• if you are unable to pay your debts as they fall due and you enter into an
arrangement with your creditors.
If you are in any doubt as to whether the insurer should be told about any particular
change to the insured risk, please ask us. Aughtersons Insurance Brokers Pty Ltd
Some kinds of liability policies (including professional indemnity, directors & officers and
trustees liability) are usually issued on a “claims made” basis. This means that (subject to the
other terms of the policy) the policy covers claims made against you during the period of
Under section 40(3) of the Insurance Contracts Act, if your policy is a “claims made” policy,
and if you give notice in writing to the insurer of facts that might give rise to a claim against
you as soon as is reasonably practicable after you become aware of those facts but before the
period of insurance expires, the policy will cover (subject to the other terms of the policy) any
subsequent claim against you that arises from those facts, even if that claim is not made until
after the period of insurance has expired. (If you presently have a “claims made” policy,
please consider whether there are any facts that should be notified to your present insurer
before that policy expires.)
If your policy is a “claims made” policy, and if it has a “retroactive date”, it will not cover any
claim that arises from any act, error, omission or conduct that occurred before that date.
A contract of insurance is a contact of the utmost good faith. This means that you and the
insurer must act towards each other, in respect of any matter arising under or in relation to
the contract, with the utmost good faith. For example:
• you must act with the utmost good faith when submitting any claim to the insurer. If you
fail to act towards the insurer with the utmost good faith, it may prejudice the claim; and
• the insurer must act with the utmost good faith when handling the claim.
We are covered by the Federal Privacy Act and it’s National Privacy Principles, which set out
standards for the collection, use, disclosure and handling of personal information. We respect
your privacy and are committed to protecting your personal information.
We collect personal information in order to provide our various services. These include
insurance broking, claims management, risk management consultancy, underwriting
management and reinsurance broking. Other purposes include helping to develop and identify
products and services that may interest clients, conduct customer satisfaction surveys,
establish and administer alliances and other arrangements with out organizations in relation
to the promotion administration and use of our respective products and services. For further
information regarding our services please contact your Aughtersons representative.
We disclose personal information to third parties who are involved in the provision of our
services. Aughtersons Insurance Brokers Pty Ltd

For example, in arranging and managing your insurance needs we may need to provide
information to insurers, re-insurers, other insurance intermediaries, its advisors such as loss
adjustors, lawyers and accountants, and other parties involved in the claims handling process.
We also may provide it to purchasers of our business and related Aughtersons companies.
When you provide us with personal information about other individuals, we rely on you
to have made them aware that; you will or may provide their information to us, the purposes
we use it for, the types of third parties we disclose it to, and how they can access it. If it is
sensitive or health information, we rely on you to have obtained their consent to the above. If
you have not done either of these things you must notify us before you provide the relevant

If you would like a copy of the Aughtersons Privacy Statement or would like to access
your personal information, please contact the Aughtersons Privacy Officer on (03) 9879-7699.
Unless you notify us in writing otherwise, by proceeding to deal with us, you confirm on
your behalf and/or on behalf of those you represent agreement to the above principles.
We subscribe to:
• The General Insurance Brokers Code of Practice; and
• Financial Ombudsman Service (FOS). FOS fairly and independently resolves disputes
between consumers — including some small businesses — and member financial
services providers. Membership of the Financial Ombudsman Service is open to any
financial services provider carrying on business in Australia.
FOS cover financial services disputes including banking, credit, loans, general
insurance, life insurance, financial planning, investments, stock broking, managed
funds and pooled superannuation trusts.
If you are not satisfied with our service, or if you would just like more information,
please contact our Complaints Officer on (03) 9879-7699.
The original of your policy wordings have been provided to you or will be passed to you as
soon as they are received from Insurers. It is in your own interests to read these documents
without delay and advise Aughtersons Insurance Brokers Pty Ltd in writing of any aspects
which are not clear to you or where any aspect of the cover does not meet with your
requirements. Aughtersons Insurance Brokers Pty Ltd
The information we obtain from you as part of the process of placing your insurance
programme includes details of the replacement value of the property you wish to insure.
Are your insurance Declared Values accurate?
Unless you have recently had an insurance valuation, you may run a risk of declaring
inadequate Sums Insured. Aughtersons Insurance Brokers Pty Ltd can arrange external
valuation services for the purposes of financial reporting and providing an accurate
assessment of insurable values. Frequently they find that when they carry out a valuation for
the first time, declared insurable values represent 50-75% of the correct amount. There are,
of course, exceptions where they find cases of over-insurance.
However, this occurs less than 5% of the time.
Why does under-insurance occur?
Principal reasons seem to be:
– A lack of independent professional advice.
– Many entities do not have accurate asset records or asset registers and consequently are not
always aware of all of the assets they own or control.
– Replacement costs are based on book values or some multiple thereof.
– Replacement costs may be based on special discounts arrangements or secondhand prices
which may not be available after a loss.
– Insurance values may be based on indexed annual increases often using the CPI and with no
assurance the original base Sum Insured is correct.
– Inadequate recognition of the impact of foreign exchange rate fluctuations in replacing
imported assets.
The reason for having insurance cover is to put you back in the position you were before the
loss occurred. If the declared values are understated, this will not occur.
Co-insurance provisions will apply even after a partial loss and can be a serious
financial burden. Aughtersons Insurance Brokers Pty Ltd
Having an Insurance Intermediary to handle your Insurance matters adds, in effect, a
specialised Insurance Department to your Company.
However, any Department, be it Sales, Production, Accounts or Insurance, can only function
efficiently if the Management keeps it fully informed and properly instructed. Since your
Insurance Brokers office is a detached department, it is imperative that a close liaison be
maintained and that all necessary information be furnished promptly.
In your own interests you should advise Aughtersons Insurance Brokers Pty Ltd of
any material alterations which may effect the adequacy of or necessitate any
amendments to your Insurance Program.
These alterations may include:
1. Acquisition of new Companies and/or mergers in which you are involved either in Australia
or overseas.
2. Purchase, construction or occupancy of new premises; or alteration, vacation, temporary
unoccupancy, extension or demolition of existing premises.
3. Increase in values in excess of Insured limits for buildings, plant and stock.
4. Removal of stocks or equipment to new locations.
5. Hire, lease or borrowing of plant and equipment.
6. Contractual Liabilities.
7. Granting of indemnities or hold-harmless agreements.
8. Changes in processes, occupancy, products or extensions of business.
9. Proposed installation of pressure vessels or new key machines.
10.Alteration, amendment to or disconnection of fire or burglary protection systems.
11.Proposed charter or use waterborne craft, except as public fare paying passengers.
12.Proposed use of radioactive materials or isotope
It is important that claims are settled quickly and fairly. To ensure that this occurs there are certain procedures which should be followed.
1. Advise Aughtersons office immediately that an event has occurred which may give
rise to a claim under one of your policies.
2. We will ensure that you have the correct claim form. Please have all relevant answered and  attach any relevant documents to support the claim, if available, otherwise do not delay reporting the loss.
3. In regard to claims which relate particularly to
– Third Party claims against you e.g. Motor Vehicle, Public Risk, Products Liability. Aughtersons Insurance Brokers Pty Ltd
Please do not incur any expense by litigation or agreement, or admit liability verbally or in writing otherwise you may prejudice your claim.

Any summons, Writ or other legal demand must immediately be directed to the Insurance Company under cover of your letter via Aughtersons Insurance
Brokers Pty Ltd.

Insurance Companies have undertaken to accept the risks you have insured against and it is their responsibility to accept or reject liability.

Uninsured Risks Exposure
The following classes of insurance’s are products generally available. We recommend that you review the coverage types to determine weather these covers are appropriate for your circumstances.
We shall be pleased to supply any additional information required to assist you in considering these areas of cover. Property, Financial & Casualty
Advance Business Interruption Financial loss resulting from project delay due to loss or damage to property whilst undergoing
construction, installation etc. Includes loss of planned trading revenue, continuance of overheads and extended interest charges etc.
Boiler and Pressure Vessels
Covers damage caused by explosion or collapse of boilers or pressure vessels as well
as legal liability to third parties arising there from.
Business Interruption (Loss of Profits, Consequential Loss)
Covers loss of income, contributes towards the continuing fixed costs of the business and
increased working costs incurred to avoid or diminish a reduction in income or interference to
the business following loss or damage to property.
Computers (Electronic Equipment)/Data Processing
Breakdown, loss or damage to computers and associated equipment. Can include cover for
loss of data, additional expenses incurred to maintain normal operations and consequential
loss of income.
Contract Works (and Contract Works Liability)
Loss or damage and third party liability arising out of construction, erection, installation and
related testing activities etc.
Credit Insurance
Financial loss due to bad debts incurred following the insolvency of a customer.
Defamation (Libel and Slander)
Legal liability for injury to the reputation, goodwill, profession, trade, business or credit of
third parties in consequence of defamation, libel and slander. Aughtersons Insurance Brokers Pty Ltd
Engineering (Machinery Breakdown)
Breakdown of machinery and can include boiler and pressure vessels explosion cover.
May extend to include consequent loss of income and/or additional expenses incurred to
maintain operations and/or spoilage of stock.
Fidelity Guarantee, Dishonesty of Employees
Loss of funds or property resulting from fraudulent or dishonest acts by employees.
Industrial Special Risks
Covers the cost of repairing or replacing physical assets following loss or damage by an
insured risk.
Provides a range of covers for residential property owners in the event of damage to their
property by tenants.
Legal Expenses
Legal expenses incurred as a result of contractual disputes, the use of motor vehicles and a
variety of other circumstances.
Marine – Inland Transit
Loss or damage to property in transit by any form of conveyance within Australia.
Marine – Overseas Transit
Loss or damage to property in transit by any form of conveyance to or from Australia and
overseas locations.
Marine Hull (and Liability)
Loss or damage to a marine vessel and includes liability to pay damages (including legal
expenses) in the event of negligent death or injury to third parties or damage to their
Motor Vehicle
This can take several forms:-
_ Comprehensive i.e. own damage and third party property damage
_ Third Party Property Damage only
_ Compulsory Third Party Act cover. This is a compulsory insurance in all states of
Australia and applies to injury or death sustained by a third party in an accident involving a
registered motor vehicle
Special Contingencies (Special Risks, General Property)
Can cover special items such as mobile phones, laptops, jewellery and variable items against
loss or damage from a designated range of causes.
Directors & Officers Liability & Company Reimbursement
Covers damages (not fines or penalties) and legal expenses incurred due to a breach
or alleged breach of duty, misleading statement or wrongful act (as defined in the
policy) by a director or officer acting in that capacity. Aughtersons Insurance Brokers Pty Ltd
Directors’ & Officers’ – Supplementary Legal Expenses
As its’ title suggests, Supplementary Legal Expenses cover is intended to supplement
a Directors’ & Officers’ Liability policy. To effect a Supplementary Legal Expenses
policy it is a prerequisite that a Directors’ & Officers’ Liability policy be in effect.
Employment Practices Liability
Covers damages and defence costs in the event of actions taken by employers relating
to wrongful dismissal, discrimination, sexual harassment etc.
Other, more specific Environmental/Pollution coverage may be available, depending on
the nature of risk.
Public & Products Liability
Legal liability to pay compensation (including legal expenses) to third parties in the
event of the insured causing or being alleged to have caused injury, death or loss of or
damage to property arising out of business operations or products.
Product Guarantee
Covers the legal obligation to replace or repair products which fail to perform their
intended function, or financial loss sustained by a customer or third party arising there
Product Recall
Covers the expenses incurred in recall of potentially faulty products.
Professional Indemnity (Errors & Omissions)
Covers the legal liability to compensate third parties (including legal expenses incurred)
who have sustained financial loss due to a breach or alleged breach of professional
duty on the part of the Insured or their employees.
Statutory Liability
Protects “innocent” employers and individuals from statutory fines arising from for
instance, breaches of legislation such as the Workers’ Compensation Legislation,
Environmental legislation, and the Occupational Health and Safety legislation.
Taxation Indemnity
Expenses incurred by the insured in the course of compliance with tax audits instituted
by the Australian Taxation Office.
Trustees Liability Insurance (A form of Professional Indemnity Insurance)
Covers trustees, trust managers, sponsors of superannuation funds in respect of legal
liability to compensate third parties (including legal costs incurred) arising out of the
negligent administration of the trust or fund

Umbrella Liability

A legal liability insurance which provides cover:
_ in the same circumstances as other liability policies such as General & Products Liability,
Motor Vehicle etc but provides additional Limits of Liability above those insurances
_ of a wider scope than the underlying liability policies Aughtersons Insurance Brokers Pty Ltd
Extra Territorial Workers’ Compensation
Legal liability to pay compensation (including common law damages) to an employee
domiciled in Australia who sustains injury, disease or death anywhere in the world outside of
their Australian State or Territory of domicile, in circumstances where a Workers’
Compensation policy may not adequately respond.
Workers’ Compensation
A compulsory insurance which must be effected in all States or Territories of Australia
in which the insured engages employees.
Provides Workers’ Compensation benefits as designated by the Government Act
prevailing in each State or Territory (including cover for common law actions where
Workers’ Compensation – Make Up Pay
This insurance provides cover for the difference between benefits payable under the
various state workers compensation acts and benefits normally payable to an injured
worker by way of an award or agreement.
Version 07/2011