Banks to remind consumers of underinsurance risks

Home loan customers will start receiving annual reminder notices from their bank about their insurance obligations from February 1, as part of the nation's new banking code.

While most mortgage holders have insurance, there are around 4 percent of property owners not insured. The risks of underinsurance will also be explained.

Stephen Munchenberg, The Australian Bankers' Association's chief executive told that the obligation on banks to ensure their customers were insured would help stamp out any change of customers not being properly covered.

"We agreed with the Government that we would remind people with a mortgage that are supposed to have adequate insurance to cover their home," he said.

Mozo advises Home loan customers to use the annual reminder notice to not only look at their insurance coverage and options but also take the opportunity to review their lender's home loan rates. Free tools such as Mozo's home loan health check allow you to compare your home loan with the market in seconds and find out which loans will save you the most.