Guide
What is a product disclosure statement?
Every insurance quote on this site ends with the same line: read the PDS and TMD before you buy. Here is what a product disclosure statement is, what the law says it must contain, how to read one in ten minutes, and what the target market determination that comes with it means for you.
- What a PDS must contain
- The five sections worth reading first
- What a target market determination is for
What a PDS is
A product disclosure statement is the document an insurer must give you when it offers or recommends a financial product. Moneysmart describes it as covering the product’s key features, fees, commissions, benefits, risks and the complaints handling procedure. ASIC’s Regulatory Guide 168 adds that it must be given at or before the time the issuer makes the offer, so you can read it before you commit. For insurance, the PDS is the policy wording: what’s covered, what’s excluded, the conditions, and how claims work.
The PDS is general. Your policy schedule is specific: it lists your business, your covers, your limits and your excesses. Read the two together.
How to read a PDS in ten minutes
| Section | What to look for |
|---|---|
| What we cover | The insuring clause for each section. Does it match the work you actually do? |
| What we don’t cover | The exclusions. Look for your activities: heights, hot work, asbestos, products you import, advice you give. |
| Conditions | What you must do to stay covered, such as locking vehicles, keeping records or notifying claims promptly. |
| Definitions | Words like business, employee and occurrence mean what the PDS says they mean. |
| Claims and complaints | How to lodge a claim, the excess, and how to complain if you disagree with a decision. |
If a clause worries you, ask the broker before you buy. Changing the wording after a claim isn’t possible.
What the target market determination is
A target market determination, or TMD, is a short document that says who the insurer designed the product for and who it isn’t suitable for. It sits alongside the PDS. If your business doesn’t fit the target market described, that’s a signal to look at a different product or ask a broker, because the policy may not respond the way you expect.
Compare quotes, then read the PDS
Product disclosure statement questions
Is a PDS the same as a policy?
The PDS is the standard wording for the product. Your policy is the PDS plus your schedule, which lists your covers, limits, excesses and any special conditions.
When do I get the PDS?
ASIC’s guidance says a PDS must be given at or before the time the issuer makes a recommendation or offer, so you have it before you buy.
Do I need to read the whole thing?
Read the cover, exclusions, conditions and claims sections for the sections you’re buying. A broker can point you to the clauses that matter for your trade.
What is a TMD?
A target market determination describes who the product is designed for. If your business falls outside it, consider another product or ask a broker.
What if the PDS changes?
Insurers issue a new PDS or a supplementary PDS when the wording changes. Check the date on your renewal documents.
Keep reading
More guides
Sources
The PDS