Home is where the heart is – please protect it

Due to the increased frequency of natural disasters in Australia, house and contents insurance premiums have significantly increased. As a result, some homeowners may be inclined to under-insure or not insure their homes at all.

Your home may be your pride and joy, an asset with a big emotional attachment, but it is also usually the biggest financial commitment you will ever make.

It, therefore, makes sound financial sense to insure your home appropriately. Whether you are reviewing your current cover or insuring a new home, here are some tips to help you make the right decisions.

Identifying your needs

Determining the appropriate level of insurance is a relatively simple process:

1. Obtaining an up-to-date valuation for your home is crucial as home prices can change significantly over time. This will enable you to match the insurance cover accordingly. You could engage the services of a property valuer for a professional opinion or contact real estate agents in your area for their view.
2. Accurately assess your contents value. While you might not think your ‘stuff’ is worth that much, most people actually have more than they realise. The value of your contents quickly adds up, especially considering the cost of ‘little things’ like your music and movie collection, clothing and kitchen items.

Many insurance companies have contents checklists on their websites to help make this process easier.

Create a detailed contents checklist and record a video of your home and belongings to assist a claims assessor in case of damage or loss. Remember to update it regularly and after purchasing or replacing major items. Keep the checklist and video in a secure location, such as a fireproof safe or with a trusted friend or family member away from your home.

3. Take into account whether you live in a known bushfire or flood risk area and consider obtaining a quote for the cost to completely replace your property. A registered builder will be able to provide you with realistic cost options to give a more accurate assessment of cover required.
4. Appropriately calculate the value of any collectibles or jewellery. Many people have inherited assets or have a special (or very expensive) piece of jewellery. Others may have collections that can turn out to be more valuable than they ever thought possible.

Make sure that you obtain a specialist valuation for any items of particular value so your insurance coverage can be adjusted accordingly.

Finding the right insurance policy

Detailed below are some tips to assist you in getting the policy that perfectly suits your personal circumstances.

• Are there any exclusions? It is said that the devil is always in the detail. Some providers have exclusions that are standard options on the same class of cover with a competitor, so make sure you read the fine print, especially when switching providers.
• Understand the options available. It’s crucial to thoroughly understand the insurance coverage before signing up with an insurance company. With a wide range of insurance companies in the Australian market, each offering different types of coverage, not all policies are equal, despite similar names.
• Are you covered for natural disasters? Damage caused by catastrophic weather events can be subjective so make sure your cover matches the level of risk your home is reasonably likely to face. Some insurance companies only cover natural disasters of certain types in particular areas.
• Consider additional policy options. You can enhance your insurance coverage with additional features by paying a little extra premium. For instance, several insurers provide coverage for alternative accommodation for a specific duration if your home needs to be reconstructed after a calamity.
• What about renovations? You need to check that your existing policy adequately covers you during any renovation process. And don’t forget to review the policy to cover the increased value of your home after the reno.
• Does absence affect your policy? Some insurers will decline to cover a home that is unattended on a regular basis or for a prolonged period of time. This is especially relevant if you’re planning to become a Grey Nomad or are often away from home for other reasons.
• Insuring a rental property. Specialist insurance for landlords may be needed to cover your home for damage or theft if your property is not owner-occupied.
• Answer all questions accurately. This is crucial because if there are any errors or untruths discovered by the insurer at claims time, it may decline to pay some or all your claim.

It won’t happen to me…

It is expected that damaging weather events will cost Australia $33 billion by 2050. Natural disasters such as bushfires, floods, and destructive storms are part of life in Australia:

Bushfires: Property losses are commonly experienced in most Australian states, typically between September and March. The direct cost of the 2019-20 bushfires has been estimated at over $4.4 billion.

Floods: Unprecedented wide-scale and repetitive flooding in recent years proves that no single area of Australia is totally safe from these disasters. The 2011 floods in Queensland which also affected New South Wales, still rank as one of the costliest disasters with the economic loss valued at $6 billion.

Cyclones and storms: Cyclones are common in northern Australia, especially between December and April, and over the decades have destroyed entire towns. However, in recent years, severe storms nationwide have caused damage on a more regular basis than cyclones.

Consider speaking to an insurance expert

If personally navigating your coverage options isn’t for you, ask for specialist help.

If your home is where the heart is, it’s crucial to protect it from potential harm.