Are you covered?
How to tell if you have enough insurance to rebuild after a disaster.
It’s one of the only things you buy that you hope never to use.
But, despite 91% of Queenslanders seeing home and contents insurance as a necessity*, more than three quarters of Australians don’t have adequate insurance to cover the cost of damage or loss to their property or possessions.
Research from the Insurance Council of Australia (ICA) revealed more than 83% of homes were underinsured which could result in the owner having to fork out substantial sums of money or going into a large amount of debt in order to rebuild.
RACQ spokesperson Lucinda Ross said weather events, such as bushfires, floods and cyclones, across Queensland would have long-lasting impacts on people who were underinsured.
“It’s important all homeowners ensure they’re insured at the right levels, and there are a variety of factors that require consideration,” Ms Ross said.
“We’re unfortunately seeing many homeowners underinsure their property which can mean they have difficulty meeting expenses after a major event.”
Underinsurance could occur if homeowners chose to ‘set and forget’ their insurance policy or underestimated the sum insured to achieve a lower premium.
The ICA research found more than 10% of homeowners deliberately underestimated the value of their home to save money while RACQ research revealed 22% of Queenslanders didn’t understand what their home and contents insurance covered*.
Ms Ross said Queenslanders should take an active approach to home and contents insurance.
“We’re urging all homeowners to regularly review their policies, especially prior to cyclone season or when you’re moving into a period when there’s a high bushfire risk,” Ms Ross said.
“Make sure you speak with your insurer to understand exactly what will and won’t be covered and review the risks for your area.
“Every home is different, so don’t rely on a ‘guess-timation’ of what your home or contents are worth and don’t expect that it will be the same value as it was when you first purchased your policy.”
Ensure you’re insured
- Make sure your home and contents insurance policy is up-to-date.
- Use a building calculator to work out how much you’d need to rebuild your home. This is particularly important if you live in an older house as building codes may have changed, resulting in extra costs.
- The cost of rebuilding after a severe storm or bushfire can be impacted by the demand of building resources in your area. This may change the cost of repairs and you should consider this when calculating your sum insured.
- Use a contents calculator to work out the value of your personal items. Do a room-by-room inventory of items in your house and note current market value to ensure you’ll be able to afford to replace them.
- Make sure you read the product disclosure statement so you understand what’s included and excluded in your policy.
*Source: RACQ Quarterly Consumer Omnibus FY21 Q3.
The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person's particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.