Stats show 29% of homeowners and 67% of renters don’t have home and contents insurance, and as many as 40% of households with insurance are still underinsured. Make sure you’re covered.
What is underinsurance? Are you underinsured?
Underinsurance is when someone does not have adequate insurance to cover the cost of loss or damage to the things they own, or is not insured at all for those belongings.
As far as material goods go, your home or property is likely to be your most valuable asset. Insuring it for less than what it would cost you to rebuild makes about as much sense as insuring a Porsche at a Hyundai price. You might get away with it, but at some stage the gap in cover is going to come back to haunt you.
How many people do not have home and contents insurance?
The David Murray Financial System Inquiry’s Final Report showed that 29% of homeowners and 67% of renters in Australia do not have any form of contents insurance.
How many people have home and contents insurance but are still underinsured?
Underinsured home insurance is surprisingly common, it would seem. The Insurance Council of Australia estimates that more than 40% of households fail to correctly assess the value of their home and contents, so there’s a real chance you could be under-insured.
Underinsured home insurance hurts homeowners at claim time
Cheap insurance may not be so cheap when you make a claim. Apart from not receiving enough home insurance money to cover the cost of your loss, there’s an added risk that can be far greater. If you have significantly under-insured your home or contents, your insurer may have the right to pay only part of any loss because you’ve insured for only part of what it’s worth.
Let’s say you insure your home for $150,000, but it’s really worth $250,000. A bushfire sweeps through the area and does $80,000 damage to your home. Your insurer may have the right to reduce the payout in proportion to the level of under-insurance.
In this case, there might be a payment of only $48,000. Sadly, that is nowhere near enough to repair or replace a $250,000 home.
When it comes to contents insurance, or even personal effects insurance, doing a household inventory of everything you own in your home is one of the most important steps you can take to protect your items. An inventory can help you keep track of everything, from your electronics and appliances to your jewellery and DVD collections. This can be invaluable when deciding how much contents insurance coverage you need and also at time of claim. We have also identified 10 ways you can cut the cost of your home and contents insurance.
Prevent underinsurance: Get your complimentary review today.
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