1. What is Home Insurance?
Think of Home Insurance as a financial helping hand if something happens to your home or belongings. Everyone has unique living situations so choosing the right type of insurance and level of cover can ensure you’re financially protected.
Here is a basic breakdown of the different types of home insurance:
● Building Insurance covers the building, including permanent fittings and fixtures.
● Contents Insurance covers personal possessions.
● Home and Contents Insurance combines the two policies above with one premium, to cover the building and your personal belongings.
● Renters Insurance covers your belongings while renting.
● Landlord Insurance covers your investment property.
The next step is to choose a level of cover. Each level up offers increased coverage, but also higher premiums. You'll need to find the right balance between price, product and service inclusions, as the cheapest may not always tick all your boxes.
Consider such factors as:
● What type of insured events your policy covers (for example flooding and water damage).
● Extra benefits (like emergency accommodation).
● Limits (some valuables have maximum amounts you can claim).
Begin your journey by reading the terms and inclusions in the product disclosure statement (PDS) for your preferred insurance, which should be freely accessible on the insurer’s website.
2. How do I know what’s covered by my home insurance?
Your policy outlines the type of cover you chose, along with any additional cover or specified items. You can check this detail in your Product Disclosure Statement (PDS), which outlines the range of items covered. Make time to read the fine print, taking note of exclusions. These are items and events not covered, and may inspire you to adjust your policy or opt for extra coverage.
3. Do I have to alter my home insurance cover over the years, or just renew it?
Circumstances change. It’s a good idea to reconsider your requirements every year, and sometimes throughout the insured policy period, should something change. If your home gains a garage, extension, pool or studio, the current policy might not cover complete replacement.
Keep in mind changing market values, and current construction costs. Could you build your home again today, based on policy conditions? Reassess these factors before renewal.
4. How do I know how much to insure my home for?
Understanding the value of your assets is key, because underinsuring is more common than you think. This means your policy won’t cover the repair or replacement cost of what was damaged or destroyed, leaving you financially exposed. An ideal policy prevents you from having to source extra capital to cover the shortfall.
The sum insured can be altered anytime. Check current cost estimates for rebuilding – remembering to include demolition and removal fees – and the market value of your contents. A calculator may help you get a better idea.
5. If something happens to my home or belongings, are the items repaired, replaced or am I reimbursed for their value?
This depends on the type of damage, the type of policy and the item itself, as it may not be possible to repair or replace it. Certain documentation and details may be required to prove the value of the items. In most cases, you can file a claim online.
Keep in mind, only a policy holder can discuss the claim with an insurance provider. Couples, for example, should consider including both names on the policy if you need to claim.
6. Can I choose my own repairer or does the insurance company choose them?
An important question, which can lead to potential issues down the track. While many providers may allow third-party repairs, the insurer will often only guarantee repairs through their nominated repairer. Using your own repairer may risk voiding the repair guarantee.
What’s more, your policy might only obligate the insurer to cover up to the cost they were quoted by their preferred repairer. In these cases, the difference comes out of your pocket.
7. What is a premium?
Premium refers to the annual amount you pay for the policy, however, some insurers also offer payments in monthly instalments.
8. What is an excess?
The excess is the amount you contractually agreed to pay the insurance provider when making a claim. Often, an increased voluntary excess can help lower your premium.
9. What does safety net mean?
Safety nets provide a financial buffer if the cost of repairing or rebuilding exceeds the insured sum. Say the sum insured is $450k, with a 10% safety net. This means an additional $45k cover. Safety net percentages vary between insurers and aren’t always included, so it’s worth checking with your chosen insurer.
10. Why are some claims rejected?
A few reasons can lead to a rejected claim. The most common reason is the policy does not cover the event or the item, such as rain entering a building due to poor maintenance or where openings, doors or windows weren’t closed. Failing to comply with policy requirements, pre-existing damage and dishonesty are also valid grounds for rejection.
Self-renovating or altering security systems can also impact some policies, so check with your insurer before making changes to your property. Non-disclosure could become a problem down the track, so take care to provide all potentially relevant information.
The devil in the details
When it comes to understanding insurance policies, it’s important not to skip over the fine print, so don’t hesitate to ask as many questions as you can before committing to a policy. Only this way can you be sure that the cover you’ve selected is right for you.