Are you underinsured for home and contents?

You’d think Australians would want to protect what’s most important to them. When you take out a home loan, you’re committing to years of repayments and making what’s probably the biggest investment in your life. But are you underinsured for your home and contents?

Under-insurance a theme across Australia

Taking out a home and contents insurance policy is one thing, but having a sufficient level of cover is a different story entirely. An overwhelming 81 percent of renters and homeowners are “exposed to significant financial loss because their insurance does not cover them to resume the same standard of living in the event of a crisis”, Quantam Market Research’s recent Understand Home Insurance Research Report stated.

“Overall, one in ten (10 percent) of Australian homes are insured according to an out-of-date purchase price (more than two years old) which the owner provided to their current insurer as an estimate of the value of their property,” the report stated.

That’s not all, though. An overwhelming 74 percent of Aussie renters don’t insure their contents!

Getting the basics right

It’s essential to understand what kind of cover is available. The Insurance Council of Australia’s (ICA) Understand Insurance site explains the importance of securing the right insurance for your specific circumstances.

If you want to protect yourself from financial loss relating to the damage or loss of a property, you need home insurance. That’s not all you should look out for – if your home’s possessions are lost, stolen or damaged, you’ll need to have contents insurance to cover the resulting financial losses, the ICA notes.

If you’re a renter saving up for a home loan deposit, make sure you secure the right cover. You’ll need to obtain contents insurance, but it’s wise to protect yourself from financial strife, should the property you live in be damaged or destroyed.

Don’t pay through the nose

Home and contents insurance is one of life’s necessities, even though it seems many Australians aren’t quite following that mantra.

While it can be tempting to avoid taking out a policy to save money here and now, consider how quickly your savings account would be depleted if the worst did happen.

Of course, you don’t have to pay through the nose for your premiums. Be sure to compare different providers’ plans to find one that suits your needs.

Review your insurance regularly

Finally, just because you took out an auto-renewing policy two or three years ago doesn’t mean you’re appropriately covered now.

Your coverage may need to be adjusted as your family grows, your home’s value increases or you acquire new electronic equipment, for instance. Make sure you regularly review what you’re covered for and adjust your policy if necessary.

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