Decoding your car insurance’s Product Disclosure Statement

While it’s definitely the most important document in any kind of product purchase, the Product Disclosure Statement (PDS) often goes unread by customers. You might think it’s simply because they can’t be bothered to read it, but more often than not it’s actually the confusing jargon used that makes the document painful – and nigh-on impossible – to digest.

So, to make sure you’re not stuck looking up every second term just to get some clarity on what you’re actually buying, here’s a list of phrases you’re bound to come across in an insurance PDS, complete with simplified explanations.

Agreed value: The agreed value is how much you and the provider agree to insure your car for. It’s the term that is shown on the current Certificate of Insurance and the figure can change with each renewal.

Cooling-off period: This is the period in which you are able to cancel the policy with no strings attached and receive a full refund, provided you haven’t already made a claim. Insurers must offer a minimum of 14 days however some policies offer cooling-off periods of 21 days or more.

Disclosure responsibilities: This is the section where the insurers tell you what your responsibilities are to them. It includes things like telling your insurer when you move house, being honest about who is regularly driving your car and keeping your car in a roadworthy condition.

Malicious event: This refers to damage done to the car by someone else that was out of your control. It includes vandalism. If you fall victim to a malicious event,

Market value: This is the amount that the insurer believes the market would pay for your car before its losses or damage.

Modifications: This refers to any alterations that have been made to the vehicle in order to change how fast it drives or how it handles. Some modifications like turbochargers or a high-performance stereo system may increase your premium. Most policies will typically cover minor modifications such as bicycle racks, tow bars, roof racks and alloy wheels.

Natural event: A natural event is classed as the single occurrence of a natural disaster or incident that results in loss or damage. This could include fire, water or falling objects such as tree branches.

New car replacement: If your car is written off, you will receive a replacement vehicle of a similar make and model as opposed to a cash payout.

Personal property cover: This coverage component or extra feature covers the loss of or damage to personal belongings. What is actually covered under this can differ between insurance policies but can often include only items which are designed to be worn or carried such as clothing, handbags or sports bags that are in your car at the time. Other policies cover a wider range such as mobiles, jewellery and laptops.

Repairable write-off: Some written-off vehicles can be repaired and re-registered, however, your car will never hold the same value again as it now has the history of a repairable write-off. You can organise with your insurer to keep your vehicle if it falls under this category.

This is when the car is deemed too expensive to repair. With comprehensive cover, you’ll either be paid out or receive a vehicle of a similar value.

Decoding your car insurance’s PDS is an essential step toward understanding the terms, conditions, and coverage of your policy. By taking the time to carefully review and analyse the PDS, you can make informed decisions about your car insurance and ensure that it aligns with your needs and expectations.

Remember, the PDS serves as a valuable resource that empowers you as a policyholder, providing you with the knowledge and clarity necessary to navigate the complexities of car insurance. With a clear understanding of your PDS, you can embark on the road with confidence, knowing that your car insurance offers the protection you desire.

This article was originally published on June 9, 2020, and was updated on June 26, 2023.

IMPORTANT LEGAL INFO This article is of a general nature and FYI only, because it doesn’t take into account your financial or legal situation, objectives or needs. That means it’s not financial product or legal advice and shouldn’t be relied upon as if it is. Before making a financial or legal decision, you should work out if the info is appropriate for your situation and get independent, licensed financial services or legal advice.