7 KEY POINTS ABOUT HOME AND CONTENT INSURANCE

1. Should I Get Home and Contents Insurance Together or Separately?

Most Aussie home owners opt for the full coverage of combined home and contents insurance. It is the best way to fully protect your house and possessions from damage or loss. It is not prudent to take out home insurance and content insurance separately. You may end up signing-up to one insurer for your home and another for your belongings.

Many insurance companies in Australia offer a good discount if you take out the combined policy. It also gives you the ease of paying only one premium. In short, a combined home and contents policy is better value for your money.

However if you are not planning to immediately move into the house, you can choose to get your home insurance sorted out first. Later you can always add on the content insurance when you move into the house.

2. What Home and Contents Insurance Extras or Add-ons Do I Need?

It is possible to tailor your home and contents insurance to best match your needs with optional covers or add-ons. Most standard policies offer basic cover, with optional features on the side for extra cover.

If you are looking for additional cover, the following add-ons may be worth considering:

• Motor Burn-out: This is a good add-on to your contents insurance. It is sometimes called Fusion Damage Insurance. It covers all items in your home that have a built-in motor. Such items include your washing machine, freezer, air condition, or hot water system. In case of damage, this add-on will cover the cost of repair or replacement. In some cases, it covers the cost of food spoilt after your fridge suffers a burn-out.
• Portable Content: This is also a good extension to your contents policy. It protects the possessions which you take with you out of the home to any place within Australia and New Zealand. These items include your wedding ring, camera or laptop. In case of loss or damage, this add-on will cover the cost of repair or replacement.
• Accidental Damage: This covers damage or breakage of glass items in your home. Such items include your kitchen items that have a glass component, mirrors, picture frames and even your spectacles. In case of damage or breakage, this add-on will cover the cost of repair or replacement of your glass or ceramic items. It may even cover damage or breakage after a stray ball hits a window.

However, note that opting to include any add-on to your home and contents insurance will mean an extra dollar or two in your premiums. Try to avoid making claims for small breakages. This is because sometimes your insurance excess (the amount you pay to make a claim) may be equal or more than the cost of the full repair job on your item.

3. How Do You Determine the Value of Your Home and Contents?

Most insurers leave the task of estimating the rebuild value of a home to the homeowner. This happens when you take out a home and contents policy that has a rebuild value cover for your property. There are 3 ways of estimating the cost of rebuilding your home:

• Check the property report or ask your home lender to provide the valuation report. These reports usually state the rebuild cost.
• You may hire a surveyor to calculate it for you.
• You may go the D.I.Y way by taking the measurements of your property and its construction details. Then use an online Rebuild Value Calculator to get the estimation.

However, for total replacement cover, your insurer is tasked with assessing the value of your home. This is because your insurer is obligated to repair or rebuild your home, at whatever cost.

Also be mindful that some of the insurance companies do not cover the demolish expenses. Check carefully with them if this has been included. This will help you to determine the actual rebuild value.

After taking out your policy, constantly review your policy and make adjustments as your belongings increase. This will ensure you avoid under-insurance.

4. How Do You Make A Home and Contents Insurance Claim?

An unfortunate incident may happen at any time, forcing you to make a claim on your home insurance. Take the case of Mary and John for example:

Mary and John lived in Sydney and operated a successful small business. After years of life in the city, they bought their dream home near Gospers Mountain, NSW and decided to retire there. Mary and John were aware that Gospers Mountain is listed as a bushfire prone area by the Insurance Council of Australia.

Therefore, to get a suitable home and contents policy, they engaged the services of an Insurance Broker. The broker assisted them to figure out how much was needed for repair or replacement of their home and possessions. The broker also included add-ons to cover rebuilding costs in a bushfire prone location.

After a year of serene life, bushfires gutted the area, completely destroying their home and its contents. They were forced to quickly evacuate their home alongside other residents. They left with nothing but the few items they could save and carry.

Mary and John made a successful claim on their home and contents insurance. Their home was rebuilt and their belongings replaced. Their insurer also paid for their food and accommodation for the period under which their home was being rebuilt.

Here are some steps to follow if & when you need to make a claim on your home and contents insurance:

• First things first: You should start with damage control. Try to prevent further loss or damage to your home and items from the catastrophe. If you suffer a burst water/sewage pipe, you may start by moving your belongings out of the house.

The leakage may already have damaged your floor and carpet. But by moving out your furniture & electronics, you’ll prevent further loss or damage caused by the imminent flooding.

• Obtain a Police Report: Certain claims like burglary require a police report. The same applies in claims for loss or damage of your items-in-transit caused by vehicle collision. Obtain a copy of the police report ASAP.
• Talk to your insurance company: Inform your insurance company immediately after an incident. Here, time is of the essence because:
  1. Most companies prefer early notification
  2. Insurance companies want to minimise costs by taking prompt action to prevent the issue becoming serious. So a timely notice helps them to ‘nip the problem in the bud’.
  3. If you take an unreasonably long time to report, your insurance company may reject your claim.
• Collect Proof of Damage: Your chances of a successful pay-out are higher if you provide concrete proof to support your claim.

You should take photos to show the damage caused. This may include a photo of the broken window or the roof crushed by a fallen tree. In case of an incident like a break-in, draw up a list of all stolen items before cleaning up.

These will help your insurer understand what happened as well as when and how it happened.

• Calculate the Loss: Determine the cost of the damage caused on your home or the total value of all your stolen items. Your insurer may also request that the valuation be carried out by a professional. All these will help your insurer understand the exact cost of reparation.
• Complete the paperwork: This depends on how tech savvy your insurer is. You may complete a home and contents insurance claim online or by a simple phone call. Other insurers may request you to download a claims form from their website, print it, fill it out and sign it. Also, make sure you have :
  1. Your Home & Contents Insurance policy number
  2. Your contact info
  3. The contact details of anyone who is party to your claim. For instance, the details of the injured person may be required for a medical liability claim.
  4. The specific document(s) your insurer needs for you to make a claim on your particular incident. For instance, a claim for temporary accommodation may require hotel receipts.
• Receive your Indemnity: Once you have finished lodging your claim, it will be reviewed by your insurer. If approved, you may be compensated through replacement, repairs, or a pay-out.

However, your claim may be declined if you hired a repairman who is not approved by your insurer. To improve your claim chances, avoid undertaking any repairs or buying new items before consulting your insurer.

5. How Do You Keep Your Insurance Premiums Down?

The premium is the amount you pay for your home and contents insurance. You may choose to pay monthly or annually. The amount depends on your likelihood of making a claim. Every insurer has a different way of assessing how much you’ll pay in premiums.

In assessing your premiums, insurers consider some basic factors:

• The location of your home: Your premium will be higher if your home is situated in an area listed for high crime rate. It’s even higher if the location is prone to calamities like bushfires and flooding.
• The make-up of your home: Your premium will be higher if your home is made of ignitable materials like wood. You can expect to pay more in premiums for your log cabin in the Outback than for your brick house in town.
• The age of your home: Your premium will be higher if your home is very old and at risk of crumbling down to a heap.
• Your claim history: Your insurance company will check the number and type of claims you’ve previously made. Numerous claims on your home and contents insurance indicate that your home has problems. This may raise your premium.
• Your mode of payment: Your premium will be higher if you choose to pay monthly compared to paying all of it in one lump-sum.
• Any additional cover that you’ve included: Your premium will be higher if you include add-ons in your policy. This may be extra cover for your pricier items like jewellery or legal liability cover.

Though home and contents insurance is vital, you don’t need to break the bank to pay for it. Consider the following tips to keep your home and contents premiums low:

• Pay online: Most insurers offer a cut-rate price if you take out your policy and pay for it online.
• Bundle them together: You need a policy for your home and another for your belongings. You’ll pay a discounted rate if you take out a combined home and contents policy. You may reduce your premiums further through a buy-multiple-policies promotion for including your car or life insurances with the same provider.
• Improve your home security: Try to install a new security system for your home or upgrade the current one. This lowers your risk of making a claim, which in turn lowers your premium.
• Think and rethink your claim: Your premium may rise by 10% if you make a claim, even if it’s a small claim. So if the pay-out isn’t worth the rise, don’t make the claim.
• Choose a higher excess: Opting to pay a higher amount for excess reduces your premium.

As you continue paying your premium, keep reviewing your policy and evaluating your needs. Sometimes your premium for the next year may rise, even though your situation hasn’t changed. It may also rise even though you never even made a claim.

Some of the reasons why your premium may rise include:

• Government legislation: The government may introduce new taxes and tariffs, which may spill over into your premium.
• Inflation: Insurers usually adjust premiums in order to offset effects of inflation.
• Overall claims: This doesn’t mean your own claims only. It also includes all other claims your insurer has received recently from customers. Insurers may raise premiums to refund their coffers in case they received numerous claims that necessitated pay-outs.
• Business conditions: Your insurer may raise premiums because the cost or conditions of business have changed.
• Individual Risk: Your premium may rise because your personal situation has changed. For example, if you enhance your home entertainment with the latest home theatre system, your home & contents premium will rise.

When it’s time to renew your policy, don’t just let it turn over into the next year. Check out other offers and compare, you just might find one that provides you cover you’ll love at a bargain price.