When taking out insurance, we don’t always consider changes in circumstances that may affect our coverage. For example, buying a new home, undertaking major renovations, or changing your occupation are situations that directly impact a policy’s terms. In fact, overlooking these updates can lead to insufficient coverage or even legal issues in the event of a claim. That’s why, at Ambler we explain a key aspect of this: what regularisation is, its importance, and how to apply it to avoid future issues.
What is regularisation?
Regularisation, in general terms, refers to the process of adjusting or bringing a situation into compliance to ensure it meets established regulations, conditions, or requirements. In the insurance sector, this concept is essential to guarantee that insurance policies accurately reflect the current circumstances of policyholders and their assets. It means adapting coverage and premiums to changes in the client’s personal or professional situation, aiming to provide full protection against potential risks and eventualities. This reduces the risk of legal disputes or insufficient coverage and strengthens trust and transparency between the insured and the insurer.
Differences Between Regularisation and Related Terms
We understand this concept can be confusing. Therefore, to clarify what regularisation means, we outline how it differs from the following terms:
Adjustment
This term means making changes or adaptations to something so that it functions better or fits a new reality. However, adjustment does not always ensure compliance with established regulations, as its primary focus is on adaptation rather than legal conformity.
Modify
It refers to making specific changes to something with the aim of updating or improving certain aspects. Although modification may be necessary to adapt to new situations, it does not guarantee that such changes comply with all relevant regulations, leaving the process incomplete from a regulatory standpoint.
Let’s consider an example to better illustrate the difference. Imagine you move house, and in this case, you need to inform your insurer because relocating to a higher-risk area may require an adjustment in the premium to ensure adequate coverage. Here, we refer to an adjustment in the insurance policy due to a change in the insured’s circumstances, specifically the move. If the new address is in a higher-risk area, the insurer may require a premium adjustment to guarantee the coverage is appropriate for the new location. This process of notifying and adjusting the policy is a form of regularisation.
Why is regularisation important?
Here are all the benefits of regularising an insurance policy:
Avoid legal issues
An outdated policy can lead to legal disputes in the event of a claim, such as being unable to receive compensation or facing legal challenges due to incorrect or outdated information. For example, if the insured assets’ details do not match their current value or location, the insurer may deny coverage, leaving the policyholder vulnerable.
Ensure adequate coverage
Updating a policy ensures that the insured assets or individuals are covered according to their current circumstances. Any change, such as home renovations or the acquisition of new assets, will be accounted for, preventing unpleasant surprises in the event of an incident. For example, a property that has been extended without notifying the insurer could be partially uninsured.
Protect the insured’s rights
Finally, keeping a policy regularised ensures proper protection while strengthening the trust between the insured and the insurer. By periodically updating the data and terms, misunderstandings are minimised and the contractual obligations of both parties are upheld.
What are the risks of not regularising?
As mentioned, failing to update the policy can lead to serious consequences in the event of a claim, such as:
Non-payment of premiums
When policyholders fail to report significant changes, errors in premium collection can occur. For example, if a policyholder changes vehicles and does not update their policy, the insurance may not adequately cover the new car in the event of a claim. This can lead to issues for the policyholder, who would not be fully protected, and for the insurer, which might face invalid claims.
Insufficient coverage
An outdated policy can even leave recent assets or situations unprotected. For example, if a policyholder has made improvements to their home, such as adding a garage, and does not update their policy, that new space would not be covered in the event of a claim.
Rejected claims
If a business, for example, changes its activity from a retail store to a chemical warehouse and fails to notify the insurer, the insurer may consider that the new risk was not covered under the original policy and therefore reject any compensation claims arising from a related incident.
Regularisation process
Understanding what regularisation means also involves knowing its process and each of its steps:
1. Identify the changes
The first step involves assessing and identifying changes that may impact the insurance coverage, such as alterations to insured assets—like purchasing a new home—a change in professional activity, or personal circumstances such as marriage or the birth of a child. Recognising these changes promptly is crucial to avoid gaps in protection.
2. Collect all relevant documents
Next, you should gather the documentation that supports the identified changes. This may include sales contracts, invoices for purchased assets, building permits for renovations, or any other proof validating the new circumstances.
3. Notify the insurer
Notify the insurer of the changes. This allows them to adjust the policy according to the insured’s new circumstances, ensuring the coverage is appropriate and compliant.
4. Policy Adjustments
Finally, based on the information provided, the insurance coverages or premiums are adjusted as agreed with the insurer. This step ensures that the policy remains effective and that the insured is protected against any eventuality in their new circumstances.
Common Mistakes When Regularising
Did you know that certain mistakes could leave you inadequately covered? Here are some of the most common:
Lack of communication
When policyholders fail to maintain regular communication with their insurer, opportunities to update the insurance terms and ensure they reflect the current reality are lost. For example, if a business expands its activities and this is not reported, the new risks may fall outside the contracted coverage, which could be disastrous in the event of a claim.
Failure to meet established deadlines
Delays in notifying changes or submitting required documentation can lead to coverage suspension or even policy cancellation. This is especially critical in cases such as premium renewals following renovations or changes to insured assets, where delays may result in losing the right to claim compensation.
Your peace of mind, our priority
As you can see, understanding what regularisation is ensures that your insurance is always in compliance and covers your actual needs. At Ambler, we have been supporting our clients every step of the way since 1991, so they can enjoy the peace of mind of being protected. Our team of experts specialises in identifying your needs, offering tailored solutions that guarantee the safety of your assets and the protection of your interests. We work with you to eliminate risks and optimise the benefits of your insurance. Our goal is to provide a transparent and high-quality service, allowing you to feel supported at all times. Ready to protect what matters most? Contact us and take full control of your security.
