Take Cover
Home insurance options decoded.
Live in NSW? You could be paying a lot more for home insurance than those in other states (assuming the risk factors are the same). Why? Because more than half your bill is probably taxes – GST, stamp duty and, increasingly, an ‘emergency services levy’. In other states, taxes make up about 20 per cent of the bill. For homeowners in the ACT, GST is the only tax applied. It’s possible that this tax slug is part of the reason 15-17 per cent of owner-occupiers in NSW don’t bother to insure their home at all, compared to a figure of 5 per cent nationally.
In NSW, insurance companies are legally obliged to remind you of the previous year’s bill when the next one hits, so you at least know if you’re paying more or less. So how do you go about paying as little as possible for your home insurance policy? We’ll get to that, but first a few facts to demystify how the home-insurance system works and the tools available to help you navigate it.
It is a common misconception that you ‘pay by postcode’ – that is, get ripped off if you live in an expensive area. It’s a bit more complicated than that. Premiums are set by the degree of risk facing each property and insurance companies have a wealth of information from government and other sources on the likelihood of flood, fire, storm, burglary and even earthquake individually facing each and every one of Australia’s 11 million properties. As of June this year, you can access this information yourself on the MyHazards app (available from the Apple Store), the first of its kind in the world. Just enter an address to discover the particular risks your insurance company attributes to that property. And be aware that while many policies include flood cover, some treat it as an extra. Or sometimes you can opt out. So back to the key question: how to get the best premium? Campbell Fuller, spokesman for the Insurance Council of Australia, offers these tips:
✚ Shop around each year when you receive your renewal notice. Be sure to compare coverage too.
✚ Opt for a higher excess amount in the event of a claim, which will reduce the premium.
✚ Bundle home, car and any other policies with the same insurer to obtain a discount.
✚ Consider home improvements that may reduce your premium. (For advice see the MyHazards app.) Non-insurance among tenants is chronic issue, adds Fuller. “The landlord is reponsible for insuring the building, but two-thirds of tenants do not take out insurance for their contents.”
For those who expect governments to step in after a natural disaster such as bushfire, cyclone or flooding, Fuller cautions that there would be only limited official relief. “The government does not rebuild houses.” #