Stephen Hughes is an Adelaide-based insurance broker with Strathearn Insurance Brokers, specialising in insurance packages for mining companies and their employees. Here, he gives us the 'heads up' on insurance protection.

Q: So Stephen, in the current economic climate why is it important to have insurance?

A: Insurance is largely recognised as being the most cost-effective method of protecting your personal assets from risks like fire, storm, theft etc.  Most families would purchase the ‘essential insurance products’ like insurance for the home, car and home contents.   If you have a home insurance policy you should check to ensure that the policy extends to include public liability insurance and also provides domestic workers compensation insurance cover (if you employ cleaners etc). 

Families, particularly those on single incomes, should consider insurance like income protection, which provides weekly compensation of up to 85% of the worker’s weekly wage in circumstances where they cannot work as a result of sickness or accident. 

Workers compensation insurance is critical.  While employers would carry this insurance for their employees, if you are a contractor you will need to ensure that you have purchased your own workers compensation insurance policy. 

Unfortunately I do not have a licence to deal in life insurance, but I would recommend that families discuss insurance products like life insurance and trauma protection with a licensed life insurance adviser. 

Q: Is there anything families should be wary of when talking to insurance agencies? Do you suggest shopping around?

A: If you are looking for motor vehicle insurance or home and contents insurance it can often be more cost effective to contact the insurance company directly. It is quite easy to phone a number of insurers to gain alternative quotes. 

Remember that insurance is a contract, so insurers will only pay claims in accordance with their obligations under the contract. If something is excluded under the contract, insurers will not pay the claim. Make sure you read all exclusions under the contract, so you know what is not included. Do not buy the insurance unless you know what is not covered.  Flood is a good example: some insurance policies have specific exclusions for flood.  

The cheapest policy may or may not be the best policy. If you are arranging your own insurance then you should review the Financial Services Guide that will be sent with the insurance product and make sure it covers you adequately. 

Q: What specific insurance is relevant for mining families and why?

A: I can’t comment on life insurance products as I’m not licensed as a life insurance broker.  Families should contact a life insurance adviser to discuss insurances like life insurance, trauma protection and/or income protection insurance. 

We can provide an income protection insurance policy for benefits of up to 104 weeks and up to 85% of the worker’s average weekly wage.  This will cover you for loss of wages arising out of any sickness or accident. 

If you do have an income protection insurance policy or life insurance policy, make sure that it extends to cover all your mining activities.  For instance, policies may have exclusions for work underground. 

Q: What particular elements should you look for in an insurer? (Size of the company, price etc?)

A: Australia is fortunate in that it has very strong prudential regulation in place. As long as the insurer is APRA (Australian Prudential Regulation Authority) approved then it should generally be okay to deal with.  Do not deal with foreign insurers unless they are approved in Australia. 

Q: What suggestions do you have for families on a tight budget?

A: There are lots of insurance providers around and it is worth reviewing your insurances and shopping around for the best deal.  

Q: Is one type of insurance more important than any others?

A: Difficult to say! It really depends on the family’s individual situation. 

Q: Is there a danger of being over-insured and wasting money on unnecessary premiums?

A: Generally, most families are under-insured rather than over-insured. (Catastrophes like the 2009 Victorian bushfires show this time and again.) You need to make sure that you are correctly insured.  For example, we would recommend that you have your house valued so you know what it would cost to rebuild if it burned down. Make sure your contents are insured for replacement value.