ASIC working with providers to tackle underinsured homes

Home insurance providers have been working with the Australian Securities and Investments Commission to tackle the high rate of underinsurance in Australia.

“Our goal is to make sure that consumers buy insurance [to suit] their needs – including helping to reduce levels of underinsurance, especially when there are natural disasters,” said Deputy Chair of ASIC, Peter Kell.

According to Quantum Market Research and reported by ASIC, 81% of homeowners and renters are exposed to financial loss in the event of a crisis.

ASIC announced today that some providers have taken on its recommendations and have improved services to help Australians make more informed insurance policy choices.

These improvements include switching from policy jargon to “plain English’ with fact sheets and going over details of insurance policies verbally, rather than referring customers to read product disclosure statements.

The problem of underinsured homes in Australia was highlighted at the beginning of bushfire season this year which saw hundreds of homes go up in flames. A study conducted by researchers at Monash University found that 9% of homeowner respondents did not have house insurance, and 41% of tenants did not have contents insurance in bushfire prone areas.

But home insurance policies are not the only type Australians are incorrectly purchasing or not purchasing. Earlier this month, Mortgage Choice chief executive officer, John Flavell said adequate car insurance and income protection policies are being neglected too.

“There is a growing trend of underinsurance in Australia, which is simply not good enough.”

“[Australians] do not consider insurance to be essential and as such, don’t think about insuring their vehicles or other assets,” Flavell said. “It really makes you wonder how many Australians don’t have the right insurance policies in place for their personal situation.”

If you are underinsured, the good news is that Mozo’s insurance hubs are designed to help you switch over to the right policy for your situation.

As the Mozo home and contents insurance comparison tables show, policies can vary greatly. Take the Westpac Premier Residential home and contents insurance as an example. It includes underinsurance protection and covers things such as storm surge and accidental loss and damage which are features not included in all policies.