The silent spread of underinsurance – Ensure you’re covered correctlyUnderinsurance, it’s a term that many think insurance companies use to scare customers into getting more expensive insurance. However, underinsurance is a true threat to how you could bounce back if things go wrong. Saving on your premiums now can hinder you in the future when it’s time to rebuild your home.
Why could you be underinsured?You are underinsured if the amount of cover you have obtained for your home and contents policy is less than what your home would cost to rebuild in the event of a total loss. You could be underinsured if:
• You have renewed your policy with no review each year
• You have made additions to your home or contents
• You have under-valued your home or contents
• You have not considered the costs of rebuilding, demolition, or removal or debris in your total sum
Luckily, CGU’s building cover will automatically cover 10% of your buildings sum insured extra towards rebuilding fees and debris removal at no extra cost to your premium.
How much cover is right?In order to find out the correct amount to insure your home and contents for, it can be helpful to list out each room and calculate the value of what each room holds. For example, your bedroom might hold approximately $44,300 worth of items including jewellery, bed, linen, TV, or furniture. Whilst your children’s room might hold a value of $16,600.
On our website, you can access our easy-to-use Home Building and Home Contents Calculators. The ten minutes it takes to complete the questions can save you a whole lot of money and hassle in the case something does happen to your home.
How to calculate the costs of rebuildingThe calculator will determine the quality of items within each room of your home, whether they are average, quality, or prestige, as well as determine the replacement value of the structure of your home. For example a contemporary home with rendered walls and new finishing’s may cost less to replace than a federation era home with timber frames and weatherboard linings which may be more difficult to replicate and install.
The calculator will also take into an account if your home is elevated on columns or posts, as this will add an average of 15% to rebuilding costs. Then it will be time to consider the extras such as verandas, pergolas, glass houses, pools, spas, shades, decking, carports, cooling and heating systems, and even tennis courts if you have one.
It’s also important to note that if your home is on a slope, the costs of rebuilding will increase anywhere from 5% for a gentle slope, 20% for a moderate slope, to 30% for a severe slope of the land.
LimitationsThere can be limitations within your policy on items in your home. For example, CGU’s Listed Events Contents policy will limit your jewellery, watches and gold to $2500 per piece, fur items to $2500 per piece, sporting equipment at $3000 in total, and battery-powered items (such as mobile phones or cameras) at $2500 per item. This doesn’t mean you can’t insure anything over these amounts, it just means you’ll have to tell your insurer about the items exceeding limits and ask for them to be increased or covered under a different policy.
Don’t get trapped into wanting to pay less for your premiums in order to save money now. When it comes to home and contents insurance, being adequately insured is vital to ensuring you can continue the same quality of life after an insured unforeseen event occurs.
It’s always wise to read you Product Disclosure Statements thoroughly in order to fully understand what is covered and what is not. For more information regarding Home Contents Insurance, contact CGU today.