Understanding your product disclosure statement for car insurance

When you want to understand your rights and responsibilities with any particular car insurance policy, the product disclosure statement (PDS) is your go-to resource. 

If you’ve never properly read yours before, you’re not alone. But spending a bit of time with it now can help you avoid unexpected surprises if you ever need to claim. And as a bonus, learning how to read a PDS can even help you compare policies better.

So let’s see what makes the PDS tick.

Think of the PDS as the single source of truth for your car insurance policy. It’s a legal document that lays out how your cover works, what events are protected, any exclusions that might apply, and how claims are handled. 

Insurers are required by law to provide a PDS to every prospective customer, and it’s written to be as transparent as possible.

You can usually access the PDS on an insurer’s website even before you buy a policy. 

The PDS unpacks everything about your cover, from what’s included to situations where you might be left out of pocket. Here’s what you’ll find.

What exactly is covered

The type of policy you have - whether it’s comprehensive, third party, or something in between - shapes what’s protected. The PDS will clearly spell out the all the differences in coverage for these main three levels of cover:

• Comprehensive insurance. Comprehensive car insurance covers your car for damage caused by accidents, theft, fire, vandalism, natural disasters and more. It also covers damage you cause to other people’s vehicles or property.
• Third party property damage (TPP). Third-party property insurance protects you if you damage someone else’s car or property but doesn’t cover your own vehicle.
• Third party, fire and theft (TPFT). Third-party fire and theft is a third-party policy that adds a bit of token cover for your own car if it’s stolen or damaged by fire.

The PDS will also outline extra features included in your policy, like emergency towing, hire car after theft, or cover for personal items damaged in an accident or stolen from your car.

Insured events and specific exclusions

The PDS outlines the specific incidents you’re covered for, known as ‘insured events.’ This might include accidents (even if it’s your fault), theft, storms, floods, fire, vandalism and more.

But coverage often comes with conditions, and certain exclusions may apply depending on the event. For example theft might not be covered if the car was left unlocked or with keys inside.

Policy limits

Your PDS won’t tell you the exact insured value of your car, that’s found in your Certificate of Insurance (more on that later), but it will usually provide limits on certain areas of cover like additional benefits or extra features that come with your policy

For example there’s usually a fixed payout limit for personal property (like child safety seats or tools) that were in your car at the time of an insured event.

Optional extras

Insurers often offer extra features you can add to your policy for more protection. The PDS outlines what’s available, how it works, and any limits.

Common add-ons include options like windshield cover that will repair or replace broken glass without paying an excess, or roadside assistance that will come to your rescue if you break down on the side of the road.

Definitions

Insurance language can be loaded with jargon. The PDS includes a definitions section to help you decode it. This is where terms like ‘total loss,’ or ‘undeclared driver excess’ are clearly explained.

If you hit confusing terminology in the main sections, flip here to see how it’s defined.

General exclusions

Beyond exclusions tied to specific events, the PDS lists general exclusions that apply across the entire policy.

These often include damage caused by illegal or reckless activities, damage from normal ear and tear, rust damage and others.

If in doubt, this section is where you’ll find the things your policy will usually never cover, no matter the circumstances.

Excess

While your Certificate of Insurance lists the exact excess you’ll pay, the PDS explains how different excesses work and when they apply.

These might include:

• Standard excess. The base amount you pay when making most claims.
• Young driver excess. An extra charge if the driver is under 25.
• Unlisted driver excess. If someone not listed on your policy was driving at the time of an incident.

The PDS also explains how excess payments work, whether they’re deducted from your payout, paid directly to the insurer or paid to the repairer. 

Claims process

The claims section in the PDS lays out what to do if you ever need to use your policy to make a claim. It covers:

• How to report an incident and what documents you’ll need (like police reports or repair quotes)
• How your claim is assessed and what happens if your car’s written off
• Timelines for assessment and repair
• How to dispute a denied claim if you think the insurer got it wrong

Knowing this process upfront can make claiming less stressful if the time comes.

Good news: you don’t have to slog through your entire PDS all at once. The following steps are meant to help you familiarise yourself with the document at a high level - so that when the need arises, you’ll know exactly where to look:

1. Start with the table of contents. The table of contents will not only help you locate the exact section you need, but it also helps you understand the flow of information. 
2. Review the definitions. The rest of the PDS will be easier to follow if you have a decent understanding of the key definitions.
3. See how coverage and exclusions are presented. For example, many product disclosure statements use handy tables to clearly display how coverage and exclusions are applied for each type of claim. 
4. Bookmark the claims process section. Review the claims process, and keep a copy of it in your glove box or near your phone at home. That way, when it’s time to claim, you’re not scrambling for this information.
5. Contact your insurer. Don’t hesitate to call your insurer and ask for clarity if anything in the PDS seems unclear.

The PDS explains how your policy works, but it doesn’t confirm your personal details or provide evidence that you’re covered. That’s where your certificate of insurance (COI) comes into play. The COI lists important personal details like your policy number, policy start date, premium costs and the car insured.

In short, the PDS outlines the general policy rules, while the COI details the specifics of your individual policy.

Your understanding of car insurance would be incomplete without first understanding your PDS. So why not spend a few minutes with it now and avoid a massive headache later?