Home Insurance Tips

Home Insurance Tips

Home and contents insurance

There are 4 Tips to get the right Home Insurance for You, and they are:

  1. Get a valuation
  2. Decide on level of cover
  3. Look at inclusions and exclusions
  4. Shop around


UNDER INSURANCE on homes and content items is a serious problem in Australia.

There have been many reports over the years showing that under 25% of claims for total building losses were under insured. Variables such as sloping blocks, inflation and a sudden demand for tradesmen after a disaster can cause the cost of rebuilding to come up short of the agreed value.


Step 1 – Get a valuation

To ensure full insurance cover – get a realistic valuation of rebuilding costs or consider insurers who offer under insurance protection. The new Total Building Replacement Cover insurance guarantees to cover the cost of rebuilding. This is an improvement on traditional home insurance policies, which are for an agreed value.

This means you don’t have to worry about whether the replacement building costs in case of fire etc will exceed the insured sum. The Australian Consumers Association describes it as a great advance in consumer protection that it wants to see applied to all policies.
It will amaze you just how much you have spent over the years on household items, and if you needed to replace everything, it would amount up to alot of money.

Compile a list of everything, so you know what amount you should cover your contents for, go through the house, room by room; include furniture, clothes, jewelry etc.
Make a list of all your valuables, as often they will be listed separately to your other household items and furniture. If you buy something new, keep records of serial numbers, and prices.

Don’t forget the outside, there are garages and tool sheds for example, that store many dollars inside them. Once you have a complete list, it should be stored electronically in a separate location; i.e. at work, or at a relative’s house on a flash drive perhaps, but remember to update it frequently, and increase the level of cover if required. Paying a few dollars extra in premium is worth it should anything happen; and isn’t that why insurance is there?


Step 2 – Decide on your level of cover

What level of insurance do you want? Replacement costs vary depending on what you would need to replace, for example do you have standard, medium or high quality building and fitting out such as ornate ceilings in old houses or stone kitchen bench tops and European appliances?

Just how much you want to insure for determines the premiums – although some insurers offer 50 per cent more cover for 20 per cent extra cost.

Some policies have 10 per cent on top of the sum insured provided for removal of debris (costing $15,000-30,000 for a substantial house), temporary accommodation, and architects/professional fees.

Unlimited cover for accidental glass breakage, flood and landslide (caused by earthquake, storm or leaking pipe) is commonly included. Avoid policies with ‘averaging’ clauses which allow insurers not to pay out to the underinsured.


Step 3 – Look at inclusions and exclusions

Burglary and theft cause a quarter of contents insurance claims – about the same as weather damage (rain and wind).

Some policies cover burnout of electric motors (or ‘fusion’, constituting 14pc of claims) others depend on the appliance age (e.g. under 10 years), with burst pipes (9pc) and glass broken (4pc).
Generally look for policies that will replace your home and contents new for old, regardless of their age.
Also Legal liability cover if someone is accidentally injured on your property – some insurers extend that Australia wide, in case you hit someone with a golf ball on holiday.
Home insurance usually covers defined events , such as Fire, lightning, bursting, leaking, discharging or overflowing of liquids, theft, storm and rainwater run-off. It will cost 20pc-plus extra to add accidental damage, such as accidentally dropping a heavy saucepan onto your kitchen tiles (home cover) or accidentally spilling a bottle of red wine on your carpet (contents cover).

Make sure you are aware of what is not covered, with insurance companies cutting premiums by removing different levels of cover. Clauses can reduce, or stop insurance payout’s in some instances of what is classes as acts of terrorism or acts of God for example.


Step 4 – Shop around

There are some big differences between even big name policies and home premiums charged varied by about $200, in a choice.com.au Australia wide survey.
Insurers typically offer savings of 15 per cent off the combined premium when you combine your home and its contents onto one policy – plus combining with other insurance products, such as car.
Choose a higher excess ($300) to reduce your premium. Installing extra security at your home may also reduce your premium on content policies. And insurers offer Multiple Policy Discounts.