The industry has until March 23 to comment on the proposed key facts sheet that insurers will be required to give to consumers seeking home building and contents cover.

The Federal Treasury is asking for comment on what events and exclusions should be included in the one-page statement, which states what is and isn’t covered by the policy.

Treasury is also asking for comment about when the key facts sheet should be provided.

Financial Services Minister Bill Shorten says the key facts sheet will give homeowners a “plain English” explanation of their insurance policy, helping consumers understand their policy better and making it easier for them to compare policies.

“Too many people are confused by lengthy insurance contracts and product disclosure statements,” he said.

“People are entitled to know exactly what is and what isn’t covered under their insurance policies.”

Mr Shorten says the key facts sheet will help consumers make more informed decisions about their insurance, particularly their level of flood cover.

The consultation paper asks for comment about what events should be included in the sheet, such as what standard cover events should be included, whether excesses and caps should be included, and what exclusions should be explained in the “what is NOT covered” section.

It asks whether there should be a statement on how to read the key facts sheet, with a warning that the sheet is not a substitute for the product disclosure statement, and what other types of warning might be included.

The paper says a key facts sheet should be provided when people enquire about insurance. This has concerned insurers, who say it might prevent people from getting cover when they need it urgently – for example, when they have just bought a house.

They say it will create unnecessary delay and cost when existing policyholders just want to add an item to their policy.

Treasury has already offered some exemptions to the requirement to provide a key facts sheet, but is asking for industry feedback on the exemptions and timing issues.

The Insurance Council of Australia says it will continue to work with Treasury on the development of the sheets and its input has been reflected in the consultation paper.

The consultation paper Key Facts Sheet: Home Building and Home Contents Insurance Policies, is available here.