Hot summer ahead: a timely reminder to check your home insurance
According to a study by Quantum Market Research, 83% of Aussies have underinsured their home and contents, which is a cause for concern, as a recent Climate Change Report found many parts of Australia have experienced an increase in extreme fire weather.
Failure to update policies and the rising cost of full cover are the big culprits for underinsurance amongst households, but the real worry is the financial burden homeowners may find themselves in if something was to go wrong with experts predicting our most perilous summer yet for bushfires.
“At the risk of sounding alarmist … yes, Australia’s level of housing underinsurance is a concern,” CoreLogic’s Head of Australian and New Zealand Insurance research, Richard Deakin told Domain in a recent interview.
“[A lot of people] don’t really understand what it will actually cost to rebuild their property because they’re not property experts,” he said. “They may look at their sales price and say ‘the property is worth $400,000 on the market’… but it might cost $500,000 to rebuild that property, if not more,” Deakin said.
So before the hot summer hits, it’s a good idea to refresh your home insurance knowledge and check your policy’s limits to ensure you are adequately covered.
What to do if you think you are underinsured
Step 1: Review your policy and check the sum insured limits for your home and contents
Step 2: Talk to your council about any risks you may unaware of and their likelihood of occurring
Step 3: Make any household adjustments, like upgrading your security system, cleaning out gutters or trimming dead bushes
Step 4: Contact your insurer to adjust your policy
Tips to avoid underinsuring your home and contents
- To stay on top of insuring your contents at their correct value, create a room-by-room inventory checklist
- Always make sure to insure your contents to their total replacement value
- Consider listing expensive items, like laptops or jewellery separate with your policy
- Choose a home insurance policy that comes with some level of underinsurance protection. Some policies will provide you with an additional 10 - 20% of your sum insured for underinsurance protection.
- Get several quotes from reputable experts, like real estate agents, to value your home