By Chris Dougherty, General Manager, Westlawn Insurance 19 August 2014
When choosing the right home & contents insurance, it’s important to remember that not all policies are created equal. Rarely does “getting the best deal” equate to signing up for the policy with the cheapest premium. As the old adage goes “what you pay for is what you get”.
While the cost of the annual premium will naturally figure in your decision, there are many important factors to consider. Follow these 10 tips to help you make the right choice.
1. The right sum insured
The industry standard is new for old replacement, which means nominating a sum insured which will allow you to rebuild your home and refurnish. Spend time getting the amount right up front and make sure your sum insured increases with inflation and new purchases. Also, check the latest council requirements for rebuilding, particularly if you’re in a bushfire prone area. The real cost of rebuilding could be a lot higher than you might think.
2. Choosing an excess you’re prepared to pay
Your excess is the amount you’ll pay out of your own pocket before your insurance kicks in. Let’s say you back into the garage door, if you’ve got a $750 excess for the car repairs, plus a $900 excess for the garage door (yes, that’s 2 separate claims) you’ll be up for the first $1,650. Choose an excess you’d be prepared to pay if something happened tomorrow.
3. Extending cover for accidental loss or damage
You can cover all sorts of things like flushing your wedding ring down the toilet, your kid leaving their instrument on the school bus or even putting a cricket ball through the TV. You can cover individual items in the home, individual items outside the home, or, you can get a blanket accidental damage policy to cover all bases. If you’re shopping around for a cheaper policy, make sure you don’t lose any benefits like this. Remember, every policy is different.
4. Check sub-limits on everything from computers to jewellery
Some of the most widely advertised budget insurance products now limit cover for computers to $1,000 each and $5,000 all up. Jewellery and watches can be limited to $1,000, medical equipment $1,000 and tools of trade $1,000. Only you know your personal circumstances and what’s important to you. Make sure your insurance provides the cover that suits your requirements.
5. Who is insured under the policy?
If you’re taking out a policy to cover everyone living with you, make sure it covers everyone. Your insurance policy will only cover the person/s named on the schedule and their family. So be aware of this if you’re renting with friends.
The Product Disclosure Statement (PDS) is the rule book for how claims are paid on your insurance policy. Read the PDS and know what you are covered for … and what you aren’t covered for. If you need assistance deciphering the PDS, your Insurance Broker can help.
7. What’s included and what’s optional
So far, the record we’ve seen is 9 standard inclusions which have been made optional in a home insurance product. You may think you’ve saved hundreds of dollars on cheaper premiums when you’ve really just lost thousands of dollars in coverage you no longer have. Every policy is different so when shopping around, make sure you know what you’re getting as well as what you’re losing.
8. Retain your proof of purchase
Insurance companies have a legal right to make sure you’re not trying to rip them off by claiming more than what you had. They’ll replace your old items, but they’ll want some proof first. Make sure you keep records.
9. Getting the best deal isn’t about choosing the cheapest
Cheaper insurance policies are likely to have more sub-limits, more optional covers (you’ll have to pay extra if you want them included) and higher excesses than their competitors. This allows the budget insurers to reduce the amount they have to pay should the worst case scenario happen to you.
10. If in doubt, ask an expert
The expert isn’t the call centre operator, or the family friend who bought insurance just last week. Unless of course, they also happen to be a licenced Insurance Broker.
Brokers are trained professionals who act for their clients alone. They have access to better products which pay out more in more claim scenarios. And, they’ll advocate for your interests at claim time as part of the service.