Ask an Expert: How can insurers and brokers ensure customers understand sums insured and sub limits?

Most people don’t read their Product Disclosure Statement, and even when they do, it’s hard to understand. I know this firsthand — I took out the maximum sum insured on my contents policy thinking I was fully covered. Then we had a flood, and I found out my wife’s Persian rug, one of our most valuable items, was only covered for $1,000 because of a sub limit buried on page 56 of the PDS. That’s when I realised: you can be overinsured and underinsured at the same time.

Education

So how do we fix this? So how do we stop this happening to other people? It all starts with education.

Consumers need more than just a document — they need clear, practical information about what they’re covered for.

Sums insured and sub limits should be explained in a way that makes sense to the average person. It's not just about throwing around numbers; it's about showing people what those numbers actually mean when something goes wrong.

Better advice

Then there’s the role of personalised advice. Whether it's a broker or a customer service team, that human interaction is key. If someone had sat down with me and asked, “Do you own any high-value rugs, jewellery, or electronics?", I would’ve thought about it differently.

Personal conversations can help identify gaps that a calculator or form might miss.

Brokers play a huge role here too. They know the value isn’t just in finding the cheapest policy, but in helping customers understand what they’re buying. Brokers often have access to policies with better sub limits, and they can walk clients through options for specified cover when needed. 

Simplification

Another area we need to focus on is simplifying policy information. We expect customers to interpret 60-page documents full of legal terms. No wonder people miss important details like sub limits.

There’s a real opportunity to present this information more clearly — summaries, examples, comparisons across insurers. If people can’t understand what they’re buying, they can’t make informed decisions.

Documentation

If you can’t prove what you had or what it was worth, you’re in a tough spot at claims time. Whether it’s through a spreadsheet, photos, receipts, or a digital tool, what matters is having a record.

The more accurate and organised those records are, the smoother the claims process will be. Insurers want to pay legitimate claims. It’s about building trust, and that starts before the claim ever happens.

That’s why I created an app that helps people document the contents of their home, estimate values accurately, and even alerts them if an item exceeds their policy’s sub limit. It pulls that sub limit information straight from their specific insurer’s PDS, so they don’t have to go hunting for it. 

Of course, there are AI tools other than mine. The key is to make the process simple and transparent. With the right education and tools, customers can make informed decisions.

They might still choose to take the risk on certain items, but at least they’ll know what’s covered and what’s not. 

That’s what we’re aiming for: fewer surprises, better protection, and stronger trust between insurers, brokers, and the people they serve.

Attributable to Dan Novak, founder and managing director of the myVal digital platform.

 

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