Top 5 Clauses you shouldn't ignore in your Policy Wording
Insurance policies are full of fine print, but some of that detail can make a big difference when it comes time to claim. That's why part of our job as brokers is to help our clients understand what their policy really covers, and just importantly, what it doesn't.
Here are 5 clauses we pay close attention to when reviewing or placing cover, because they can significantly affect how your insurance responds in the real world.
1. Duty of Disclosure / Changes to Risk
Why it matters: Most policies require you to inform the insurer if there's a change to your business operations or risk profile, such as moving premises, expanding services, or adding new equipment.
What we look for: Clauses that set out your disclosure obligations both at the start of the policy and throughout its term.
How we help: We make sure you're aware of these obligations and encourage you to keep us informed of any business changes so your cover stays up to date.
Example: A manufacturing company started producing a new chemical product but didn't notify their insurer. When a spill caused damage, the claim was denied because the new product introduced a risk not covered under the original policy.
2. Sub-limits
Why it matters: Your policy might show a large overall sum insured, but some risks are capped at much lower amounts. These sub-limits often apply to specific situations or items, such as machinery breakdown, temporary removal of goods, cyber incidents, or damage from flood or theft from an unlocked vehicle.
What we look for: Sub-limits that don't reflect your actual exposures or day-to-day operations.
How we help: We work to find cover that fits your business needs as closely as possible. If standard market offerings fall short, we look at whether endorsements or policy adjustments can be made to better protect you.
Example: A wholesaler with $750,000 in contents cover assumed this applied to all locations. But when $80,000 worth of stock was damaged while temporarily stored offsite, their policy capped that exposure at $25,000.
3. Exclusions
Why it matters: All insurance policies have exclusions, and they vary between insurers. These define what isn't covered, such as wear and tear, certain cyber risks, unoccupied premises, faulty workmanship, or environmental risks such as asbestos or contamination.
What we look for: Exclusions that may not align with the nature of your operations or that could expose you to unnecessary risk.
How we help: We explain any relevant exclusions clearly and advocate for tailored solutions where standard cover may fall short.
Example: A professional services firm experienced a ransomware attack that locked them out of their systems for several days. Their standard business insurance policy excluded cyber-related losses, and the firm had not purchased standalone cyber insurance. We flag these limitations early and help secure appropriate protection for emerging risks like cybercrime.
[Read: The most common reasons insurance claims get rejected.]
4. Indemnity Period (for Business Interruption)
Why it matters: Business Interruption insurance doesn't just cover lost revenue during downtime, it's meant to support your business until you're fully back on track. If your indemnity period is too short, you may run out of cover before you're operational again.
What we look for: Whether the indemnity period is appropriate for your industry, recovery timelines, and business structure.
How we help: We guide you through selecting an appropriate indemnity period based on real recovery scenarios, not guesswork.
Example: A food manufacturing business suffered fire damage to a key production facility. While the rebuild took 10 months, their machinery had to be custom ordered from overseas, with supply chain delays stretching delivery by another 4 months. Their 12-month indemnity period expired before the business was fully operational, leaving them out of pocket for the final months.
[Read: Business Interruption Insurance: protecting against the unexpected.]
5. Excesses (Deductibles)
Why it matters: An excess is what you pay if you make a claim, and depending on the policy, you might have different excesses across different sections, events, or locations.
What we look for: Hidden or unusually structured excesses that could affect your ability to claim or your cashflow during a loss.
How we help: We walk you through the full excess structure of your policy so you have a clear understanding of what to expect if a claim arises.
Example: A commercial property owner lodged a claim for storm damage and was surprised to learn their excess for weather-related events was $10,000, significantly higher than the $500 excess that applied to other types of claims. This created unexpected financial strain and delayed necessary repairs.
Ready to review your cover?
The fine print can have a big impact when it matters most, but you don't have to navigate it alone. We work with you to identify potential gaps, tailor cover to your needs, and provide clarity around what your policy really means. If you would like a professional review of your current cover or need support placing new insurance, we're here to help. Contact us today to speak with an experienced broker.
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