For most of us our house is the most expensive asset we will ever own. That massive financial outlay is the reason many of us insure our homes... if something goes wrong very few of us can afford to replace that asset without the assistance of insurance to cover the costs.
The cheapest policy is not always the best and the most expensive is not necessarily the best cover for you either. So what's the difference in insurance policies and the premiums you pay? The insurance market is very competitive and you have to know what you are getting for your money. A broker is always a great person to have in your corner to help you understand the differences and advise which cover is right for you.
Today's blog will explore the basics so you can easily identify the vast differences in policies and making sure you have the cover you need.
I know its temping to do a google search or ring around the direct insurers to get your home insured and for some this approach is fine. Perhaps, if you just want to be sure you have the minimal cover to rebuild your house should it burn down or you are just covering the banks requirement to have minimum insurance in place to protect the banks investment in you. But it is a buyer beware platform. Direct insurers are not able to give you advice on your insurance, they can only do what you tell them.... and if you don't fully understand insurance, you may not be getting the cover you 'think' you are paying for.
It's all about the wording. Your policy PDS (product disclosure statement) has the absolute truths of what can be claimed come claim time. Each company will have their own PDS and their own set of rules they will pay out should an event take place.
There are 2 main types of home insurance- Accidental Damage policy or Listed events policy.
Listed Event Policy
This cover sounds fairly self explanatory. For the policy to pay out you need to experience a "Listed" or 'defined" event. These will typically include fire, storm, water, earthquake, wind, burglary. There is typically limited sums you can claim for each event. Direct insurers will usually quote these policies as their standard policy because the premium is much cheaper than an accidental damage policy.
Even in listed event policies there is typically 2 tiers of cover - a budget cover which has severely limited sums that are paid out for a claimable event eg burst pipe that causes extensive damage to your home may only have a sum of $5000 claimable coverage under this clause of the policy, which means that you will be out of pocket for all expenses over and above that amount.
A premium listed event policy may cover higher amounts of the listed event eg instead of $5000 for the same burst pipe above, you may get $15,000 for a slightly higher premium. Events will still be "defined' or "listed" claimable events for the policy to kick in. The claimable events are typically higher values than the budget policy
Accidental Damage Policy
These policies cover all the typical listed events in the above policies and most have at higher claimable amounts again to the listed event policy.
Accidental damage policies will include a lot more cover than the listed events policy. The word accident in the title is the give away. It will cover you for various accidents. So something like spilling red wine or dropping hot ashes on your carpet or the lawn mower throws a rock at the window and breaks it or you drop your fridge through the wall while moving it to clean - it covers the accidents that you don't expect, as well as the listed events at higher pay outs come claim time.
Accidental Damage policies vary in coverage too. Some include benefits like Motor Burn out automatically and for others it is an add on. Another fantastic option that can be included is for portable valuables cover - so this covers your contents and personal effect away from the house - this is useful for things like jewellery, phones and laptops etc... if they are lost or stolen away from the home
As you can see, the types of cover vary vastly and you need a clear picture of what you want covered to be sure that you are in fact getting what your 'think' you are paying for. Using a broker not only for advising you on how to get the right cover, but also they do the leg work for you. They will research policy wording as well as pricing across multiple companies to ensure you get the right cover for the best premium. Remember the broker works for you and has your best interest at heart - not the insurers bottom line. So relax, your broker has you covered