Short-term insurance: Why you shouldn't claim for every little thing

You'd be well advised to gen up on the rules of your short-term insurance policy, particularly when it comes to your claims loss ratio.

You really need to know how close you're sailing to the point where your insurer considers you too big a risk to keep you as a client, warns consumer journo Wendy Knowler.

Claims loss ratio is the total value of the claims your insurer has paid out, divided by the total amount you’ve paid them in premiums over a particular period, usually three years.

A lot of claims are justifiably rejected because the insurer was perhaps unintentionally misled about the circumstances of the client's risk, Knowler says.

And, if you become too expensive for the company in terms of your claims, they could choose to offload you.

"It is far better for you to jump - cancel - than wait to be pushed as you receive a letter from your insurer that they are cancelling your policy."

"When you apply for alternative cover, you will have to disclose that your policy was cancelled and that’s going to cost you in terms of premium and excesses payable."

Wendy Knowler, Consumer Journalist

Knowler relates the story of one insurance client who fell foul of offloading, and without warning, so that he did not have the option of cancelling his policy first.

The consumer ninja's advice is to keep tabs on your claims loss ratio for the previous three years.

Ask your insurer if you are direct insured, or your broker if they are not having that conversation with you.

Also beware of claiming for every little thing.

"Although it’s natural to want to claim for every loss, no matter how small - the broken glasses, the smashed iPad.... that’s fine if you’ve had no big claims, but it’s not going to look good if you are 'screened' for possible offloading after a couple of big claims."

Wendy Knowler, Consumer Journalist