Insurance documents can be daunting and hard to interpret. A Statement of Facts illustrates relevant ‘material information’ in an easy-to-digest way all within one document. It benefits both the insurer and the party purchasing the insurance. That said, you still need to check it carefully to make sure your policy is valid.

Let’s take a look at what exactly a Statement of Facts is, why it’s important, and how to ensure yours is right.

What is a Statement of Facts?

A Statement of Facts is a document providing a clear and concise summary of the key information the insurance company uses to determine your policy coverage.

Typically, insurers present the relevant details as a list of facts. It might span a range of areas, from assumptions about financials and activities undertaken, to certain risk factors and past claims. And in order to validate the policy, both parties must agree with the Statement of Facts. If the company agrees, then the insurance provider uses the document to draft the basis of a contract.

How does a Statement of Facts benefit the insurer?

From clarity and simplicity, to fully understanding the risks, the Statement of Facts is vital to insurance companies.

Clarity

Firstly, the Statement of Facts provides a clear and concise summary of key information related to the business. This all-in-one document saves the insurance company time when assessing the risk of potential claims. As a result, insurers can provide a faster, more consistent experience – and make sure their customers get the right products.

Underwriting assistance

Secondly, as both parties must thoroughly check and verify the Statement of Facts, it’s easy to spot discrepancies or inaccuracies. This means the insurance company can address potential issues promptly and tackle them head-on.

For example, if the insured party cannot agree that their clients are UK based, the insurers can ask questions to fully understand the risk and amend the coverage terms and quote to suit the business’ activities.

Simplicity

Finally, the Statement of Facts provides transparency around the assumptions made about the business, its background, and its activities – making it easier to submit a claim. Plus, with little room for grey areas, it can save insurers long disputes about the cover.

How does a Statement of Facts benefit the company taking out insurance?

A Statement of Facts also benefits those taking out an insurance policy – from saving time, to offering peace of mind.

Fairness

With clear and accurate information firmly agreed upon, the business should trust they have a suitable policy in place with fair terms for a competitive price.

Speed

The document saves the insured party time too. Plus, insurers tend to use the same questions. This makes it easier to get multiple quotes to compare different providers – while avoiding lengthy proposal forms each time.

Forcing focus

A Statement of Facts is a handy way to ensure the policy is relevant and up to date. When renewing the insurance cover, both parties are obliged to check and highlight any changes from the previous year – or raise any claims or incidents.

Comfort in claims

If the worst happens and the company needs to make a claim, the Statement of Facts should provide peace of mind that their policy will cover them. A clear Statement of Facts reduces potential ambiguity and provides greater certainty that their policy will cover them when they need to make a claim.

Why it’s important to check the Statement of Facts

When your policy is up for renewal, the Statement of Facts helps the insurer understand their risk to apply the right terms. It also ensures the business provides sufficient information so they’re suitably covered if they need to make a claim. But while the all-important document covers key information on the business and its risks, it’s not always exhaustive. You still need to review the material facts in your policy.

You should check that everything is right and bring to light any discrepancies, or changes in your situation. Failing to review the Statement of Facts can lead to rejected claims or even void the policy, leaving your business unprotected.

More importantly, you need to notify the insurance company of any inaccuracies or changes. And this is the case throughout the policy period, not just at renewal.

For example, say the Statement of Facts noted that the agency doesn’t provide any hosting services at renewal, but they win a contract to deliver hosting services after renewing. They need to update the insurance provider as soon as possible.

Next steps

Now you know what a Statement of Facts is and why it’s so important. But, if you have any questions or fear your Statement of Facts may be incorrect, we can help.

At RiskBox, we’ll work with you to review and amend your Statement of Facts to ensure your insurance protects you. Contact a member of our team today for an expert opinion.

Photo by Vadim Bozhko on Unsplash