Home & Contents Insurance Tips and Traps

Tips

• Avoid automatically renewing your policy. Get a few quotes (including one from your current insurer) and ask them to match the deal they offer for new customers. You can also often get discounts for buying your policy online, installing an alarm or being a senior!
• Check what is counted as included and what counts at optional cover. Some policies allow you to buy extra cover for an additional amount to cover elements like burnout of electrical motors, flood or pet cover.
• If you're an investor, you've probably already encountered landlord house insurance. If not, it's time you did! Landlords insurance is more than straight home insurance minus the contents cover as it also protects you for a range of extras relating to lost rent or troublesome tenants.
• Think twice before you claim because claims, big or small all affect your future insurance quotes. In some cases it doesn't matter if you claim for $1000 or $100,000 - your premium will still rise by 10% or more.

Policies by different operators vary dramatically in terms of what they cover double check whether your policy includes:

• Accidental damage
• Smoke damage
• Property being renovated
• Impact (such as a car hitting a wall)
• Replacement locks if you lose your keys
• Earthquake damage
• Flood damage

Traps

Many insurers won't cover events which occur if your home is unoccupied for more than 60 days.

Make sure your home is properly maintained - some insurers insist that you have deadlocks on your doors and windows.

Consider what valuables you have in your backyard - that state of the art six burner barbeque might not be covered for theft or storm damage.

Watch out for 'watery interpretations' - water damage is a really problematic area of fine print for home and contents insurance. Premiums are very expensive for flood-prone areas as insurers often know more than you do about the risks to your intended home. Check with the local council to see if flood maps are available. Also, leaky roofs are a common cause for claims-denial so make sure your property is properly maintained.

• If your property is underinsured - eg, if it would cost $500,000 to rebuild, but you've only insured it for $400,000, or 80% of its value - then your insurer can apply averaging to any partial claim. This means that if your $10,000 shed burns down, your claim will be 'averaged' at 80%, and your payout will only be $8,000 - leaving you to pay the rest of the cost of rebuilding it.

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