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Shedding the light on the right home insurance for you

Trying to sort out the type of cover you need for your home can be confusing, so we’re here to help you figure out how much cover you need, and what type of cover that might be.

Let’s face it, owning a home is expensive. However, it’s also very rewarding and it’s a dream that most Aussies strive for. So once you’ve got a home, you’ll want to protect your biggest and most precious asset in case something goes wrong, in case the unexpected happens, or in case your home is damaged or destroyed.

Trying to sort out the type of cover you need for your home can be confusing, so we’re here to help you figure out how much cover you need, and what type of cover that might be.

What is home insurance?

Home insurance will protect you financially should something happen to your home. For example, if severe weather hits and you’re affected by lightening, flooding, fire, or strong winds, then your home insurance policy can step in to help you repair damage or even rebuild your home. Likewise, if you’re a victim of crime and thieves target your home, home insurance can help you to replace the goods that have been taken as well as help pay for repairs like smashed windows or change of locks. This is why it’s important to understand how much cover you will need so you can get back on your feet quickly and live to the same standards you did before the claim.

You home insurance policy can protect the structure itself, the contents of your home, and also the exterior fitting such as garages, sheds, pools, and fences.

How much home insurance do you really need?

In order to determine the right levels of cover to suit your needs, you will need to consider how much it may cost you to rebuild your home in the case of the worst-case scenario of a total loss. Think about how much your home is valued at, what you keep inside it, and anything you have built or keep on your property. You will then need to consider any events that might occur in your area and ensure your policy covers these. For example if you live in area susceptible to fires, ensure your policy covers this, likewise if you live in a low lying area or close to a river or lake that can flood.

If you are unsure how to calculate the replacement and rebuild values, you can talk to your insurer for guidance or utilise online calculators to help you estimate the figure. Don’t forget to factor in any recent renovations which can add value to your home, as well as making sure you don’t fall into the trap of underinsurance. It’s better to be safe than sorry in the long run.

Underinsurance pitfalls

If the cost of rebuilding is more than the amount you are covered for, then you are considered to be underinsured. The Insurance Council of Australia has reported that more than 40% of Australian households fail to correctly assess the value of their home and contents. Meaning you would need to come up with the gap sum yourself if you fail to insure your home for its true rebuild value. Hence, it’s vital that you keep your policies up to date with any changes to your home, and any new additions to your contents.

Beating underinsurance

You can avoid underinsurance by taking into account the costs of demolition, removal of debris, and construction in your total valuation. Also consider any land features such as slopes or access difficulties which may cost more to get to by trades people. Ensure to update your cover if you add to your home, or if you buy new valuable items.

And finally, ensure you are familiar with your policy. Read your policy and make sure you understand it. If you’re not sure if you’re covered for a particular situation, clear it up with you insurer before it’s too late. And once insured, don’t simply leave it be. Review your policy regularly to make sure you’re adequately covered for any changes, taking into account building fee rises, or if you’ve added a pool, heating or cooling, and even new flooring. Speak to your home and contents insurance provider about any policy limits or exclusions that may apply. For more information regarding home and contents insurance, contact CGU today.