Hail the right insurance for avoiding disasters

DISASTER season is approaching quickly, increasing the urgency for households to ensure they have enough home insurance to protect themselves financially.

Working out how much cover you need to replace contents and rebuild a home can be confusing, but a combination of new online tools and a good understanding of your belongings makes the job easier.

Insurance Council of Australia spokesman Campbell Fuller said winter weather conditions had created aboveaverage potential for bushfires this year, while the chances of big storms and hail increased close to Christmas.

“We are rapidly entering what the insurance industry and emergency services colloquially call ‘ disaster season’,” he said.

Damage from Cyclone Debbie, which caused $ 1.5 billion in insured losses, is still being repaired.

The Insurance Council of Australia has launched a new building calculator to help estimate the replacement value of a destroyed home. It adds to its existing contents calculator and household inventory checklist at understandinsurance.com.au.

“We provide them free and independent as a community service,” Mr Fuller said.

Several major insurers also offer free calculators, and it’s a good idea to run a couple of different ones because they can produce different results.

Mr Fuller said other ways to get a good idea of your home’s replacement value included speaking with a builder or neighbours with similar properties, and contacting your local council to check your home was not in a bushfire area or flood zone that might increase rebuilding costs.

“Remember it’s not real estate value – it’s the cost of rebuilding, and in some cases the cost may be higher than the real estate value.”

Canstar research manager Mitch Watson said getting a property valuation – often used when buying or refinancing a home – was the most accurate way to work out your replacement cost.

“Unlike in other countries, home insurance companies in Australia ask consumers to estimate how much it would cost to rebuild their home for themselves,” he said.

“Naturally, the majority of homeowners probably have little to no idea.”

Working out the value of your contents is less technical and may simply require walking from room to room and taking notes of everything you own.

“Don’t neglect things like clothing because small things can add up to a lot,” Mr Watson said.

“Remember that you need to base your contents insurance on how much it would cost to replace each item, not on what each item is currently worth. For example, your couch might be quite old and might only sell for $ 50, but the replacement cost for a similar couch might be $ 700.”

Policies should be updated whenever new items or renovations were added to a home, Mr Watson said.