Home Insurance – why is it important?

Australia’s catastrophic summer of bushfires has highlighted the devastating impact of being underinsured, and as the cost of building in fire and flood prone areas has risen– so has the insurance costs.

The Insurance Council of Australia (ICA) estimates that over 80 per cent of Australian households are underinsured, making it extremely difficult to replace their home and contents after a disaster. The ICA notes that many simply guess the value of their property and contents rather than talking to an expert or using the helpful calculators that many providers offer. Homeowners also often neglect to update their policy when they make improvements to their property or when purchasing significant additional contents.

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 assist you with finding the right home and content insurance for you, we have noted a few key points that need to be considered.

What are you covered for?

A home insurance policy is intended to cover some - or all - of the cost following a disaster. These disasters or incidents include fire, storm, lightning, flood, earthquake, theft or malicious damage, with the policy also covering cleaning of the site and rebuilding if needed. It is also important to note that you need a separate home and contents insurance cover for the replacement of your possessions - from furniture and clothing to white goods and technology.

Replacement value 

When it comes to contents, remember that you will need to replace old for new. It is also important to get independent valuations on big ticket items, such as gold 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 entirely based on the figures you input and should act as a guide only.

Optional extras 

It 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 would be covered for this damage but it is commonly an additional option that incurs an extra fee, so it is worth ensuring you explore the optional extras available.

Annual review

It’s important to remember 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 start the home buying journey, contact HomeStart today and take the first step in getting into your own home, sooner. 

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