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Construction Costs and Underinsurance: How to make sure that your property is not underinsured
Construction Costs and Underinsurance: How to make sure that your property is not underinsured

Posted on September 14, 2021 | by | Posted in Insurance

The majority of people are entirely aware that inflation has been increasing in recent months as a result of COVID-19. However, many remain unaware of the extent to which the recession has impacted the building sector and what this implies for their property insurance. A shortage of building supplies and a rise in salaries are only two of the factors that have increased expenses and may leave your house uninsured and vulnerable.

In this post, Matrix Insurance, the number one insurance broker in Perth will discuss underinsurance and the many risks associated with increasing your building’s costs.

What are construction costs? 

Construction expenses are included in the total cost of developing a constructed asset, such as a building. In general terms, these are those associated with the actual construction activity, and for some projects, they may be defined by the value of the contract with the prime contractor. Furthermore, this includes all supervision, materials, supplies, labour, tools, equipment, transportation, and other facilities furnished, used, or consumed.

Construction cost estimates are crucial to your firm’s profitability and capacity to attract new business. Moreover, it is critical to be as precise as possible. 

What does it mean to be underinsured? 

The entire aim of insurance is to safeguard you against unforeseeable events. Due to current events, insurance premiums for residential and rental properties are increasing. In fact, they have grown by over 60% on average during the last decade. Underinsuring your house might result in a severe financial problem, depending on the magnitude of the damage and the size of the insurance gap.

Furthermore, underinsurance of your house and goods is a significant issue at any time, but it becomes exponentially more significant if you lose your home. The majority of people realise that being underinsured means that you may not have enough insurance money to repair and replace the same quality as before. However, it can also impair your insurer’s ability to assist you with the rebuilding and replacement process, adding to your worry and uncertainty. In some instances, this may imply that you cannot rebuild your house at all. The saddest thing is that many people are unaware they are underinsured. In cases like this, they previously purchased the proper level of house and contents insurance, but have not examined it regularly since then.

What does it mean to raise construction costs?

Due to rising building expenses, your property may require greater insurance coverage than it currently has. Home insurance brokers use software to determine the property’s minimal rebuilding value. They enter all of the data about your home into an evaluation program that calculates the maximum amount of insurance required for your property. Furthermore, insurance companies generally need new evaluations every few years, at which point your building’s coverage is renewed.

The building limit on an insurance policy is determined by the cost of reconstruction. If the cost of rebuilding increases, the maximum you bought on your insurance may not be sufficient to restore it to its pre-loss condition. Even in markets where the cost of building materials has not increased significantly, many people are grossly underinsured. Add to this the fact that the cost of rebuilding has increased considerably, and the number of underinsured individuals is growing even larger.

Construction costs and underinsurance:

The majority of property owners understand that the sum insured on their property is based on a reasonable replacement value. Moreover, the rebuilding costs are typically far greater than most people realise, which implies that many individuals are now underinsured.

Overall, as construction expenses rise and the building value covered by your policy grows, so does your house insurance rate. Underinsured businesses may also fall short of their stipulated co-insurance percentage, forcing the business to accept a share of the loss, drastically reducing the claim payout.

Moreover, being underinsured and failing to meet co-insurance obligations may have a severe financial impact on a firm. If the present rate of growth in building materials prices continues, your property insurance may not be sufficient to cover the cost of rebuilding. Additionally, the policy’s maximum is determined by the cost of rebuilding your house or workplace. Failure to account for growing construction material costs might result in underinsurance.

How to prevent underinsuring your property: 

Buildings insurance is based on rebuild value rather than market value. If your property is insured for less than its rebuild value, it is underinsured. This means that, in the case of a claim, insurers will not pay the entire amount. Instead, they will pay an average amount.

Making modifications to your rental property, such as building an addition, increases the property’s value but also decreases its insurance value. Similarly, a frequent example of underinsurance happens when a property owner renews their insurance policy year after year without updating it to reflect market inflation.

Homeowners should update their property insurance values at least once a year, avoid relying on internet insurance calculators to determine replacement costs and search for insurance choices. With this in mind, here are some ways you can avoid property underinsurance: 

Seek professional help: Agents can assist customers in reevaluating replacement cost estimates for buildings, contents, equipment, and business disruption to verify that the proper coverage levels are in place. They can also verify that the appropriate policy limits or sub-limits are in place, ensuring that customers are neither underinsured nor unfairly punished by co-insurance obligations.Take advantage of an insurance appraisal: Bear in mind the expenditures for reconstruction, site upgrades, and total demolition and waste disposal. Since demolition and debris removal expenditures are generally the first to be addressed in the case of a claim, it’s critical to have an exact estimate. If not, you risk having insufficient money available for rebuilding and site upgrades.

Getting the right insurance package for your country pub
Getting the right insurance package for your country pub

Posted on June 29, 2021 | by | Posted in Insurance

Business owners will recognise the value of a good insurance policy that covers their needs.

But if your business is niche, such as a country pub, it’s highly recommended that you go through a specialist hotel and pub insurance broker to ensure that your policy is set up correctly and you get the most competitive premiums available. Being with a specialist pub broker means that they have the knowledge and availability of insurers, so you can be reassured you are only paying for the cover you actually need.

Why use a specialist insurance broker?

A specialist broker will go out of their way to understand your unique business insurance needs. In the case of a country pub, an insurance package needs to take into account what the risks for the business are. These may include:

  • Fire and property damage from storm, electrical mishaps etc
  • Malicious Damage, vehicle impact (more common that you think!)
  • Theft and money stolen from premises
  • Business Interruption claims if your property is damaged and you cant trade
  • Breakdown of critical equipment. Eg Coolroom, and beer systems
  • Injury to workers while on the job
  • Cyber hacks and theft

Once the unique risks have been identified, a broker can then tailor a package to suit.

Matrix Insurance Group’s tailored packages 

Insurance policies can be complicated, and often can be difficult deciphering the information to determine what you do and don’t need. It is important therefore to use a trusted insurance broker such as Matrix Insurance Group, who will determine the level of cover you need, and help you understand the details of your policy.

Ensuring you have the right amount of cover is vital, but you don’t want to be paying extra if you don’t need to.

Many country pubs are large, federation-style hotels, meaning that if you are responsible for insuring the building, it becomes very important to insure for the full replacement value of the building. 

Matrix Insurance Group will recommend you have a professional Building Replacement Valuation undertaken to guarantee you are insuring the building and contents for the correct amount. This will help you avoid under-insuring, and then missing out on full compensation in the event of a loss occurring.

Matrix Insurance Group can also advise on your public liability insurance needs and then design a package that suits. Country pubs don’t fall into a “one size fits all” policy when it comes to public liability insurance, so it is important to consider your individual needs. Matrix Insurance Group will also work with you to ensure you pay the lowest possible premiums on your public liability insurance.

Discuss your needs

The team at Matrix Insurance are more than happy to discuss your insurance needs and find you the right policy for your country pub. Contact Matrix Insurance Group today to set up an appointment.

What are the Qualifications for a Licensed Insurance Broker?
What are the Qualifications for a Licensed Insurance Broker?

Posted on March 12, 2021 | by Alex | Posted in Insurance

So you’re interested in becoming an insurance broker in Perth and want to learn about the qualifications for this job position. Insurance brokers are licensed financial advisers that provide professional advice in regards to insurance products and policies. Their goal is to help businesses and individuals secure the right level of insurance cover for their assets.

Insurance brokers have access to a broad spectrum of insurance products and have connections with multiple insurance companies. This enables them to compare multiple insurance products and find the most suitable cover for many different clients.

They also provide the right information to their clients regarding any special conditions or situations that need to be addressed. With extensive knowledge and experience in handling a wide variety of insurance policies, insurance brokers can arrange the most desirable outcome for their clients.

Read on to discover how you can become an insurance broker and the skills necessary to succeed in this field.

What skills does an insurance broker need?

Are you methodical, organised, and excellent at doing research? Do you have great communication (and negotiation) skills? Just like any other job position, being an insurance broker requires the right set of skills so you can secure the best insurance for your customers.

To be successful as an insurance broker, you need to be dedicated to doing numbers and conducting research. You will also need to be great at negotiating and decisive when selecting insurance policies. Most importantly, you need to be driven by helping your clients obtain the best and most cost-effective insurance solution.

Here is the list of skills and attributes that you need to have to thrive as an insurance broker:

  • Passionate and eager to help other people
  • Methodical and highly organised
  • Excellent communication and negotiation skills
  • Strong problem-solving skills
  • Detail-oriented

As an insurance broker, your job is to act as an intermediary between insurance companies and their clients. You will use your extensive contact list to find and arrange insurance packages from a large number of insurance companies. Being a licensed broker, you are qualified to advise on applicable benefits, costs, exclusions, and negotiable premiums.

In addition to arranging cover, you will also act on your client’s behalf in the event that an insurance claim is made. Here are the tasks you’re expected to complete as an insurance broker.

  • Assess your client’s assets and insurance needs
  • Research appropriate insurance products to recommend
  • Manage/facilitate cover for businesses and individuals
  • Act on behalf of your clients during a claim
  • Advise clients on benefits and insurance risks
  • Liaise with multiple insurance companies
  • Provide information regarding costs, exclusions, and details of various insurance products

Steps to become a licensed insurance broker

Step 1: Complete a Certificate III (Tier 1 / Tier 2)

The first step in becoming a licensed insurance broker is to complete a Certificate III in Insurance Broking through an accredited educational institute. You’ll come across plenty of providers that offer this course so make sure to do your research and confirm that the course you’re taking is compliant with the Australian Securities and Investments Commission (ASIC) Regulatory Guide 146.

The course will introduce you to the insurance market in general along with financial and legal information that insurance brokers must know. 

Step 2: Acquire your diploma

Once you’ve obtained your Certificate III, the next step is to undertake the Diploma of Insurance Broking. This qualification will offer in-depth information on the fundamentals of insurance broking with an emphasis on building client relationships, identifying risks, and highlighting complex client needs.

Public Liability Insurance can make or break your small business
Public Liability Insurance can make or break your small business

Posted on March 09, 2021 | by Alex | Posted in Insurance

Public Liability Insurance in Perth is one of the highest priorities for anyone in business. Without Public Liability Insurance your business could face significant out of pocket expenses if something goes wrong. 

Some things are out of your control and while it can be easy to think it’ll never happen to you, unfortunately no matter how careful you are, accidents can happen. Claims are costly and legal bills are expensive – even if a claim for damages is unsuccessful, you might be left with a large legal bill if you’ve had to get legal representation or advice during the claim process. 

Lack of insurance can lead to disaster for small businesses. But what happens if you are not able to access Public Liability Insurance?

Many small businesses across Australia are forced to close every year due to costs associated with not being properly insured; and unfortunately for some, they are simply unable to access proper insurance.

Some businesses are denied insurance due to the fact they have made claims in the past. Insurance companies will also take into account the nature of each business and what risks are involved, meaning some businesses may be deemed too high a risk due to what they have to offer; and simply won’t insure them. Other businesses have reported that their premiums have increased so much that they simply can’t afford them. 

Without adequate insurance, these businesses can’t continue to operate, and many have had to close.

Working toward a solution

The Australian Small Business and Family Enterprise Ombudsman Kate Carnell has been lobbying Federal Government to take urgent action on this matter. 

She says she has spoken to many small business owners and found numerous companies that were forced to shut down because different factors meant they were unable to take out public liability insurance.

Ms Carnell’s view is that the Government needs to find ways to help small businesses access essential insurance products; and to address the lack of availability of public liability insurance. 

She says issues with access to public liability insurance can be largely attributed to the unlimited nature of injury claims, and the potential for large damages to be awarded. Ms Carnell believes a government review of the way claims are made is well-overdue.

How can you protect your small business?

If you have concerns over your own Public Liability Insurance, the team from Matrix Insurance can help. Make an appointment with one of our experts, and have a chat about your concerns and your needs, and we will help to find a solution. Give Matrix Insurance a call today.

How to Choose the Right Insurance Broker
How to Choose the Right Insurance Broker

Posted on February 16, 2021 | by Alex | Posted in Insurance

Insurance is more than a commodity – it is the very thing that can keep your business afloat should disaster strike. It also has bottom-line functions. It can increase investor appeal and help a company remain profitable during downturns. Proper insurance is more than just a requirement, it is an essential business decision that should be made with care and knowledge.

Selecting an insurance broker in Perth for your company’s risk management needs is akin to choosing a partner with whom you’ll have a business relationship. Cost may be a concern, but it should not be your primary concern. So what then should you look for when selecting a commercial broker? Here is a roundup of considerations

What Type of Carriers and Coverages do They Offer?

One of the best ways to decipher a quality broker is by studying the carriers they represent. Only the most responsible and fiscally sound brokers get contracts with the best carriers. Make sure they work with A-rated carriers.  Check out their financial stability rating on Credit rating bureaus such as Standard and Poor’s and A.M. Best.

Also, investigate what insurance products your broker offers. Do so with an eye toward the future. Today you may be looking for a run of the mill Business Owners Policy (BOP), but what are your insurance needs in the future? As your business grows and changes, your insurance needs will likely do the same. Start a relationship with a broker who has the products and expertise to grow and change with you.

Lastly, look for a broker who can provide you with international coverage policies. In today’s tech sector, international operations are often the standard. Make sure your broker has access to policies with worldwide coverage.

Does Your Broker Know Your Industry?

Today’s business world is more specialized than ever. Since a broker is like a partner in your business and risk management, it‘s essential they understand your industry. Like other professionals, brokers sometimes specialize in specific industries.

Broker expertise is required to secure the best insurance coverage at the best rates especially with emerging technology businesses involved in blockchain or micro-mobility solutions. Not every broker is an expert in every risk. Be sure your broker knows your business.

Look into Your Broker’s Licensing and Operations

Most states require brokers to have a license and maintain continuing education requirements to sell or service insurance. Look for a broker that has the appropriate licenses to deal with your company’s geographical operations. If you conduct business in multiple states, be sure your broker has the proper licenses to secure your coverage in those states.

The same logic applies if you conduct international operations. You need a broker who has the proper licensing and contracts to obtain global coverage for your business.

Technology Should Foster Ease and Efficiency

When it comes to your business, select a broker who can offer you digital solutions to your most pressing concerns. For example, investigate the broker’s application process. Can it be completed digitally? What is the time frame for the submission process? Can the broker supply digital quotes?

Next, consider policy documents. Can your broker offer digital policy documents and endorsements? Can you bind a policy electronically? Of most importance to many commercial operations is the process of obtaining a Certificate of Insurance (COI), look for a broker who can provide digital COIs promptly.

There is nothing more frustrating than holding a bid or contract while you’re waiting for your broker to complete a COI.

A Smooth Quote Process is a Good Sign

The quoting process can speak volumes about how a broker operates. A competitive and best rate quote depends on gathering the most applicable underwriting information. Are your broker’s questions regarding your operations and their scope relevant? Do they understand the nuances of your business? Is the online submission process easy to navigate?

Also, ask yourself if the quoting process is professional. Does the broker inspire trust and confidence?

Claims Expertise is Essential

Claim time is where the rubber meets the road. A broker with a good track record in claim handling is essential. Find out what kind of claim services the brokerage offers. Do they have an in house claims team to handle the details of your claim and make sure you get a proper settlement?

Ask your broker about past claims handling experience to get an idea of their claim practices and services.

Customer Service Requests

Often once a broker secures coverage for your business, they turn your file over to an account executive who handles your coverage throughout the term. As your business grows and changes, your insurance coverage will likely change too. You will need endorsements, certificates, and have questions about coverage during the policy term.

It is essential that your brokerage can respond to these requests quickly and efficiently. Before selecting your commercial broker, ask about their policy service procedures. You may even like to meet the other team members who service your account.

Investigate the Broker’s Reputation

In today’s connected world it’s easier than ever to find reviews and testimonials about brokers. Check out third-party reviews and discussion threads on sites like Reddit. You can also ask the broker for testimonials or case studies from clients whose businesses are like yours.

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