Home Insurance why is it important?
Wednesday, 6 April 2022
With natural disasters seemingly on the rise, it has highlighted the devastating impact of being underinsured. Unfortunately, as the cost of building in fire and flood prone areas has risen, so has the cost of insurance.
The Insurance Council of Australia (ICA) estimates that around 83 per cent of Australian households are underinsured, making it extremely difficult to replace a home and its contents after a disaster. The ICA notes that many simply guess the value of their property and contents and the cost to rebuild or repurchase, rather than talking to an expert or using the helpful calculators that many providers offer. Homeowners sometimes forget to update their policy when they make improvements to their property as well, or when making significant purchases such as a smart TV or a major appliance.
While more Australians are living and working at home, filling home offices with pricey monitors and equipment, home insurance has never been more important. To help you find the right home and content insurance, we have noted a few key points to consider.
What are you covered for?A home insurance policy is intended to cover some - or all - of your costs following a disaster. These disasters or incidents include fires, storms, lightning, floods, earthquakes, theft or malicious damage, with the policy also covering cleaning of the site and rebuilding if needed. Ensuring you’re aware of the current cost of supplies if a rebuild is required is important, otherwise you might be reaching into your own pocket to cover the difference.
It is also important to note that you need separate home and contents insurance cover for the replacement of your possessions - from furniture and clothing to white goods and technology.
Replacement valueWhen it comes to contents, remember that you will need to replace old for new. It’s also important to get independent valuations on big ticket items, such as jewellery and collectable items, and to update them every few years as market value can change dramatically. Web calculators that estimate content replacement costs can be useful but be conscious that they are based on the figures you input and should act as a guide only.
Optional extrasIt doesn’t take much to accidentally crack your phone screen or lose a valuable piece of jewellery. Accidental damage protects you against these unexpected mishaps. Many people assume they will be covered for this damage, but it is often an additional option that incurs an extra fee, so it is worth ensuring you explore the optional extras available and what those excess fees are.
Annual reviewRemember that rising costs erode the value of your insurance unless you are regularly re-evaluating it. Savvy consumers regularly review their insurance policies to make sure it compares favourably to others on the market. Check whether your insurer annually adjusts your sum insured to be in line with inflation and let your renewal notice stand as a reminder to reconfirm that your insurance company is acting in your best interests.
If you think that you are ready to begin the home buying journey or make a fresh start, contact HomeStart today and talk to someone about taking the first step in getting into your own home, sooner.
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