Switching home insurance providers – when’s the right time?

11 minute read

What you'll learn

• When is a good time to consider switching?
• Some of the steps involved when switching home and contents insurance
• What to look for in new home and contents insurance cover
• Some important things to think about before you switch cover

Thinking about switching home insurance cover?

It’s worth reviewing your home insurance and contents insurance regularly to make sure you’re getting value for money and that your insurance policy is still right for your situation. But how do you know when it's the right time to switch?

 

For home insurance customers, setting aside some time to review your home insurance products, your sum insured, the items covered by your policy, your premiums and any extras covered will help ensure that if the unexpected should happen, you can avoid being out of pocket.

When is a good time to switch home insurance providers?

There's never a wrong time to review your cover, and switching home and contents insurance providers is worth considering from time to time. However, we usually only do something if there’s a trigger to make us think of it, like when we have a change in circumstances or we’re buying a new home.

 

For anyone who pays their home insurance policy premium annually, a trigger might be when the policy renewal reminder arrives in your inbox. This can function as a flag to do a quick review of your policy to see if it is still working for your situation and whether your sum insured is still 'fit for purpose'.

 

There are other triggers too. For example, you could be setting up home in a new state, buying a new house, downsizing to a smaller property, purchasing an item of value like an engagement ring, or even doing a massive cleanout that leaves you with less to 'replace' in the event you need to make a claim on your contents insurance. All these are great reasons to review your existing insurance policy.

 

 

Whatever the trigger, it's a good idea to regularly review your existing cover to make sure it’s right for your current needs and situation. It gives you the opportunity to compare home and contents insurance from a range of providers and helps you protect your home and its contents from unexpected events.

Here are some things to consider:

The cost to rebuild your home

Over the last decade, the cost of labour and building materials has increased dramatically meaning the cost to rebuild a home has risen too. In fact, the likely result is that many Australians are underinsured – which ultimately means they may not be covered for the full amount should they need to rebuild or replace their possessions.

Here is a calculator to give you an idea of what it might cost to rebuild your home - use it to help make sure your building sum insured meets the actual costs of a rebuild in the event disaster strikes. You can use this figure when you're comparing home insurance to help ensure your sum insured meets your needs.

Cover for valuable items

Laptops, mobile phones, and jewellery are among the most popular things people list on their contents insurance policies, so they are covered for a set amount rather than being included under general contents sum insured. This is a common theme in home insurance cover for valuables.

Some insurers suggest you also cover these types of items and more when they are taken out of the home - by adding portable contents cover to your contents insurance cover. Because this is generally not included as part of a standard contents insurance policy, it may need to be added as an optional cover (usually called ‘portable cover’).

Moving house or moving states

Moving house is definitely an important trigger to review your current policy. Not only will the replacement cost of your new home be a completely different ballgame, you will also need to consider risk factors, such as flood and fire, in your new location.

Home improvements or renovations

Doing renovations or home improvements can change the building sum insured and may lead to different coverage requirements, so it’s a good idea to notify your insurer if you are doing major renovations. It’s important to review your policy if you renovate or improve anything about your home to make sure your property is fully covered should you need to make a claim.

Buying an investment property

While this in itself will involve taking out a separate insurance policy such as landlord insurance, it could also be a trigger to take a general look at all your home insurance cover and contents insurance cover. 

How to switch home insurance, a step-by-step guide

Switching home insurance providers doesn’t need to be overly complex, but there are several important steps you should follow to help you make the best decision for your circumstances.

Step 1. Review your current policy and sum insured

Get familiar with your existing insurance policy so you are well prepared when you are doing your research. The Product Disclosure Statement (PDS) is a great place to start as it contains full details of what is covered under each policy.

 

The PDS and policy documents for your existing home and contents insurance policy will show the extras and optional cover you have, what home insurance excess options you've chosen and options available. You can also find any exclusions or limitations that might come with the cover. 

 

Each of these things make a difference in helping you decide whether the cover is still right for your situation or not.

Step 2. Compare home and contents insurance

Not all home and contents insurers are equal. So, once you have your own policy details front of mind, doing research and comparing cover from other insurers is much easier. 

 

It will help you be confident when making choices because you’ll be more likely to understand any differences when you are comparing other home and contents insurance with your own. 

 

The next section contains some hints and tips to help you when you compare home insurance providers.

Step 3. Read the home insurance cover PDS documents

Once you’ve narrowed down your choice to one or two home insurance cover providers, you should compare the standard inclusions and exclusions, and consider any optional cover. You can find the full details of the cover in the relevant PDS documents. Understanding the differences will help you get a feel for what may be covered and understand what's available and how it compares.

Step 4. Get quotes from your shortlisted insurance providers

While the home and contents insurance cost shouldn't be the only factor worth considering, it’s certainly part of the decision-making process so getting a quote is vital. 

 

Most insurance providers offer quick online quoting tools to help you get a baseline comparison figure. Make sure you are plugging in consistent details on the different tools though, because this can make a real difference to the outcome.

Step 5. Avoid a cover gap if you swap to a new policy

If you decide to switch home insurance cover, once you’ve made a choice, you will need to apply for the new cover and cancel your current policy. Knowing which documents you might need for this will help streamline the process and avoid any delays. 

 

It’s also important to make sure your cover continues during this time. You can do so by carefully scheduling the date of cancellation of your existing policy around the date the new insurance policy begins so they overlap. Make sure you are aware of any relevant waiting periods before you cancel your current policy.

Comparing home insurance policies – things to consider

Home and Contents Insurance policies can differ in many ways so it’s important to decide what is important to you. That way when you compare home insurance you are making your decision based on your personal and financial situation. 

 

Here are some things you might think about when you compare home insurance:

What coverage options are available?

Look for a home and contents insurance provider that offers comprehensive coverage for both your home (building cover) and your personal belongings (also known as contents cover). 

 

Note that if you have purchased an investment property, you should investigate landlord insurance. If this is the case, you may only need building insurance as tenants should have their own contents insurance to cover their personal belongings. If you provide any contents for your tenants’ use, you may be able to cover these items under a landlord contents insurance policy.

Does the policy include cover for key insured events like fire and flood cover?

Think about what inclusions the policy has. Is flood cover included as standard? Does the policy's standard cover include other insured events such as fire, earthquake, theft, and storm damage? It’s also important to be aware of any exclusions.

 

Is accidental damage cover an option? How much legal liability cover is included if someone was injured on your property? 

 

Does the new policy provide accommodation for you (and your pets) when you are rebuilding? Does it include damage from smoke as well as from fire, and what are the limitations on that? 

 

Try to dig deep to understand all the details of what may be covered and what may not, especially with insured events. You may be surprised at the differences you find between insurers, and these details count if you ever need to make a claim.

What are the optional covers and extras?

Some insurers provide additional features you can add on to tailor your policy. This could include cover for items that you take with you outside the home (portable contents cover) or cover for items of high value. Does your home insurance cover valuables?

 

Other optional cover and extras may include temporary accommodation and domestic workers compensation cover. You may also be able to add motor burnout cover for certain electrical appliances.

 

Sometimes it is the optional covers and added extras that make a difference when you are setting out to compare home and contents insurance. But keep in mind that these will usually add to the cost of your premium.

What are the limits and exclusions?

It's important to understand the cover limits or any exclusions that might apply if you were to make a claim. Home insurance policy providers have varying exclusions, and some may also have maximum dollar limits on items under your contents sum insured, so make sure your new policy is going to cover the things you need.

What does home and contents insurance cost?

This may seem like the obvious dealbreaker, and of course the cost of your premium is important, but price should only be part of the decision. 

 

A budget-type cover can come with a minimum premium amount, but it may also mean there are more exclusions – so make sure you watch out for that. 

 

Always ask for a quote, and when you receive it spend time scrutinising the terms and conditions to make sure you are comfortable with what you’re covered for.

 

Are there any savings or discounts?

Some insurance companies may offer discounts for putting home and contents insurance into a combined policy. Perhaps they have a no claim bonus to help reduce home and contents insurance cost. Maybe there is a discount if you take out insurance online. 

 

Often, more than one discount may apply, which can make a huge difference, so it's worth asking the question.

How are the premiums charged?

Some insurers charge an annual premium. Others have a monthly payment available at an extra cost. Some allow you to pay monthly without penalty. Think about your budget and make the decision based on what’s right for your situation.

How about claims processing?

See if you can find out what percentage of claims they pay. Look for independent reviews and ratings for customer service. It’s important to know you’re supported in your time of need should an unexpected event occur, and you need to make a claim.

Check their reputation

Is the insurance company an established insurer with years of claims history behind them or are they new to market. Either way, make sure you’re comfortable with their track record and reliability to fulfil their obligations to policyholders, especially in the case of an insured event like a large-scale disaster, bushfire or flood.

Important things to think about before you switch home insurance providers

Reviewing your home and content insurance may reveal opportunities to save money or ensure you are properly protected if you need to make a claim. However, if you decide there's a more suitable cover for your situation, there are some important considerations before you make the switch. 

Maintaining cover during the switch

We’ve already mentioned it, but you should ensure there is no gap in coverage to avoid the risk of being uninsured during the transition between one home insurance policy and another. 

Fees or penalties for switching insurance providers

Some insurance providers may charge a cancellation fee if you terminate the policy before the renewal date. If you switch and then decide to return to your initial insurance provider, you may lose benefits like discounts or no claim bonuses. Understanding financial implications is important to avoid unexpected costs.

Switching when you have a mortgage

For homeowners with mortgages, ensuring compliance with mortgage requirements is essential. You need to make sure you inform your mortgage provider, and that all agreements are upheld. 

Making the switch in the middle of a claim

Talk to your current home insurance provider to find out whether switching will affect the claim which is underway. If so, you may need to postpone the switch until after the claim is settled. 

 

Despite the steps involved, reviewing your home and contents insurance regularly is one way to ensure your cover is right for your situation (and your budget). Many Australians are underinsured*, leaving them open to risk of not being properly protected when it counts. Staying informed and checking your options are a great long-term strategy and to help you feel confident with the choice you've made for your home insurance.