By doing important research ahead of time to know what kind of damages and issues may happen you can make an informed and smart decision on which insurance policies suit you. Make sure you understand every part of the policy document so you are clear about your coverage and limitations. Don’t be afraid to query any issues with your insurance agent.
Are you fully covered by your insurance?
The recent spate of natural disasters have inspired homeowners around the country to dig out and dust off the old home insurance policy to see exactly just what they’re covered for.
In the wake of the Queensland floods, many homeowners have discovered their property was underinsured leaving them with unexpected expenses for repairing or replacing damaged property. But would you know if you’re adequately covered?
Work out what would need to be replaced.
Make sure your home contents are insured to their true replacement value. Go through each room in your house (including the garage!) and estimate how much it would cost to replace every item. Everything from crockery and cutlery to linen, books and clothing counts.
Your contents sum insured should reflect what it would cost to replace everything you’ve listed as-new at today's prices. With contents insurance, you can typically claim for damage to your property from things like fire or being the unlucky target of a burglar.
Useful tip: Don’t forget to let your insurer know when you buy something new that is of significant value. It’s also worthwhile having these specified items re-valued regularly to make sure your cover is up-to-date.
Cover for floods and other natural disasters.
If you haven't specifically asked for flood cover on your policy, you probably don't have it as it is seldom part of basic property insurance policies.
Generally flood insurance can be purchased as an additional extra, though insurance companies will usually review your property's location, site aspects and flood history before providing cover.
Always remember to review your insurance companies definition of “flood” too as it can vary between providers.
Useful tip: Check what exclusions might apply to your property. Depending on its location, you might not be covered for bushfire damage or flood damage. If your home is near the sea, where salty air might corrode steel in the structure which may impact your cover? If your house is in a high-crime area the insurer might require top-of-the-line security.
Don’t just cover your home, cover your investments too.
If you’re a landlord, you can not only insure your physical property but also for a range of other risks involved with renting out your house or unit. These can include the loss of rental income should the building be damaged and become uninhabitable, intentional damage by a tenant or their guests, tenants doing a runner without paying, and legal liability as a result of a tenant being injured.
Protect your business.
Your home contents policy will probably be sufficient to cover a home office computer, modem, fax and printer, provided you’ve alerted your insurer to the fact you work from home. Business stock stored at home generally won’t be covered though.
If your business is a major source of income or you have a lot of equipment, you should consider taking out commercial insurance.
Quick policy check list. Does your policy cover?
- • Home office equipment
- • Fusion (equipment damaged by a power surge)
- • Loss of your credit card
- • Items outdoors, such as barbecues
- • Frozen food
- • Tools of trade
- • Cash on premises
- • Visitors' belongings
- • Your property while it's unoccupied
- • Malicious damage
- • Impact by something such as a car
- • Earthquake damage
- • Flood damage
- • Smoke damage
- • Replacement locks if you lose your keys
- • Property that's being renovated
- • Accidental damage, rather than just "defined events"
The insurance policy you take out is likely to change in benefits over the years, so shop around when it comes time to renew your policy. You may find that there are better offers available to you.
You can also save yourself time and stress by doing important research ahead of time. Knowing what kind of damages and issues might happen to your property (i.e. living in bushfire or flood prone areas) you can make an informed and smart decision on which insurance policies suit you.
Make sure you understand every part of your policy document too, if you’re unsure speak with your insurance provider so you are clear about all your coverage inclusions and limitations.
April 2011
