HOME INSURANCE – take cover
Running a household has its ups and downs, so each week we bring you the latest tips and tricks to make your home life easy
The disastrous bushfires this summer were a tragic reminder on the importance of home and contents insurance. Do you have or are you considering getting home and contents insurance? It pays to do your research before you buy and every year when it’s time to renew, you could save some serious cash. Canstar.com.au finance expert, Steve Mickenbecker has all the latest.
PEACE OF MIND
Home and contents insurance should be a must. The home is the biggest expenditure most of us make, and puts us into debt. Loss of the home would leave us homeless and still in debt that needs to be repaid. It’s hard to make a financial comeback from that if you’re not insured. So what is it exactly? Home insurance is designed to protect the house that you live in and its fixtures such as the things attached to the house, including the built-in appliances, carpets, etc. If the core elements of a home are damaged or destroyed in an event covered by the policy such as storm, flood, fire, insurance should cover the cost of repair or replacement.
Contents insurance protects possessions within the house like your clothes, television and refrigerator. If you are renting, you probably just need contents insurance, as your landlord will have home building insurance over the investment property you’re living in. Even if you don’t make a claim, insurance gives you the peace of mind to enable you to get on with life.
CHOOSING THE RIGHT INSURANCE FOR YOU
Choosing the right home and contents insurance should involve more than simply
valuing your assets and choosing the cheapest premium on offer. Insurers design different insurance products to suit a broad customer base, so it is important to make sure that the cover you end up buying covers those inclusions that are important to you.
Some policies cover the core risk to the property, which leaves you without cover for events like electric fusion and accidental damage. These extra inclusions can come at a hefty extra premium, and it can be a valid call to just cover for the main risk.
Then there are different exclusions and definitions of events, like flood, that can leave you uncovered if the event doesn’t meet the more limited definition. Cheapest isn’t always best, but even when comparing like with like, there is a large variance in premium, meaning that it pays to shop around.
IF THERE’S A NATURAL DISASTER LIKE A FIRE, FLOOD OR STORM WILL EVERYTHING BE COVERED?
Fire is almost always covered, but bushfire could be excluded in some bushy areas. It pays to check. Storm is another incident that’s covered but comes at a cost in prone areas like North Queensland, where premiums can be three times the equivalent for the rest of the state.
Flood, however, has many definitions – flash flooding (generally immediate flooding from a nearby rainfall event), riverine flooding (where the whole river comes up) and tidal surge (on the coast). Policies may cover all, just flash flood or no flood event at all. Check your policy.
PERFORM REGULAR INVENTORIES
Regularly preparing an inventory can be a crosscheck to ensure that you’re not under-insuring yourself. On the other hand, it could be easy to forget about some of your possessions when there is a major loss and an inventory means that you don’t have to rely upon memory when it comes to claim time.
At the other end of the spectrum, it is also easy to inflate the value of items – for instance, a suit becomes an Armani suit. An inventory is the first line of proof that the item actually existed before the event.
ARE PREMIUMS SET TO RISE DUE TO RECENT DISASTERS?
With the recent fire devastation in Australia does that mean premiums will go up?
To some extent bushfire risk is priced into insurance premiums already. However, this event has been more widespread than most, and has resulted in claims in areas that might not have expected bushfire devastation.
With the degree of loss, it would be optimistic to expect no increase in premiums, especially in those areas that had not previously been priced for bushfire risk.
To see more on the bushfires, visit canstar.
com.au/bushfires.