In today's climate of increasing extreme weather events and natural catastrophes, individuals seeking to safeguard their homes and belongings face a challenging dilemma. As the frequency of these incidents rises, so does the demand for comprehensive personal insurance coverage. However, this surge in demand, coupled with a higher volume of claims, has led to a significant increase in insurance costs1.
Factors affecting home and contents affordability
Although currently there is no area of Australia that is totally uninsurable, the availability and cost of home and contents insurance can vary significantly based on location2. Premiums are often influenced by several factors, including the frequency of claims in a given area. Additionally, rising construction costs — driven by the necessity to comply with updated building codes, challenges associated with building on complex sites and escalating labour and material expenses — further impact insurance affordability.
Common mistakes in insurance selection
Choosing a policy on the basis of cost alone can be a costly mistake. A cheaper policy is likely to compromise the value of the cover it provides and could leave you exposed to insurance gaps. If you want comprehensive cover for theft, fire and flood losses, it's crucial to thoroughly consider the insurance you need — consulting with your broker can guide you through the complexities of policy options and product disclosure agreements and contractual clauses to ensure you have the right cover for your current situation.
Policies have limits, such as coverage ceilings for individual items or restrictions on the conditions under which coverage will be fulfilled, as well as limitations on special items and valuables such as jewellery. A broker can also help advise on insurers specialising in specific coverages, like artworks or wine collections.
Ineffective insurance cost saving strategies
Underinsuring your property or valuables by understating their value can lead to significant losses if you need to make a claim.
Delaying premium payments beyond the typical 14-day terms can also result in being uninsured at a critical time. Consider premium funding or direct debit options to avoid these pitfalls.
Why insurance claims may be declined
The primary purpose of insurance coverage is to ensure financial compensation in the event of a loss. Ensure your investment in premium pays off by avoiding these common pitfalls:
- Neglecting home maintenance: claims for damages like water leaks may be declined if maintenance issues, such as broken roof tiles, are evident. Regularly clear gutters and trim overhanging branches to prevent damage.
- Lack of proof of ownership: claims may be reduced or denied if you can't provide evidence of ownership or value. Acceptable proof includes sales receipts, original packaging, certificates of authenticity, or valuation documents.
- Forgetting upgrades: failing to update your insurance after home renovations or purchasing new items can lead to inadequate coverage. Ensure your policy reflects the current value of your assets, including appliances and wardrobe contents.
To guarantee adequate coverage for repairs, rebuilding, or replacement, it is essential to accurately assess the value of your property and belongings and regularly update these valuations in your insurance policy.
How Gallagher can help
Involving an insurance broker who understands your risks can help you to proactively respond to insurer risk management concerns and potentially provide access to more comprehensive cover on more competitive terms.
Industry research has also found that the degree of broker involvement correlates positively with client satisfaction and claims outcomes. This means that having insurance industry guidance and input is more likely to secure cover that responds to your needs.
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