MAINTAINING A HOME
What is underinsurance?
Underinsurance is much like it sounds. It refers to having insufficient insurance to cover the entire value of your home or contents in the event of a claim.
According to Emergency Management Victoria, in 2017 approximately half of Victorian homes weren’t adequately covered with home and contents insurance for emergencies such as fire, flood, and storm. That’s a scary amount. If insured events were to affect these homes, there could be serious financial consequences for the home owners. Some policies may not even cover underinsured homes.
There’s a few ways you could underinsure.
Firstly, customers could accidentally underinsure due to not calculating the replacement value of their home and/or contents correctly. Or, customers might estimate correctly initially, but forget to update their coverage if the value of their home or contents goes up.
Insurance customers could also become underinsured intentionally to save on premiums. In this case, if an insured event occurs, the repair costs will most likely outweigh any minor savings. In most cases, it’s not worth the risk!
3 tips to avoid underinsurance
You might find yourself underinsured for many reasons
But what exactly does that mean?
It’s when your level of insurance isn’t enough to replace or repair the loss to your home your contents or your car from events such as theft, fire, or storm But you may be able to avoid underinsurance with these 3 tips!
1. Research your policy
Including making sure it’s up to date
And check what is and isn’t included on your policy
2. Add big-ticket items to your policy
Renovations to update your home or purchasing valuables like jewellery may increase your premium but adding them to your policy ensures they’re covered
3. Value your home and contents accurately
Underinsuring may lower your chances of covering the cost of repairs or entirely replacing your home and belongings. Visit suncorp.com.au to get a quote for insurance today
Research your policy
Make sure your home and contents policy is paid and up to date. If you don’t pay your premium by the due date, you may not be covered if something happens to your home and contents.
Also make sure to thoroughly examine what is and isn’t covered by your policy. That way, if an insured event like theft or fire occurs, you won’t have any nasty surprises when you make a claim.
Add big-tickets items to your policy
Renovations to update your home, or buying or valuables like jewellery, may increase your premium, but you should still add them to your policy. Not doing so could mean you’ll become underinsured for your home or contents.
Correctly estimate your home and contents value
Underinsuring may lower your chances of covering the cost of repairs or entirely replacing your home and belongings.
Consider the following when working out how much cover you need:
- The price you paid for your home and contents isn’t necessarily the amount it would cost to rebuild or replace. Tools like the Suncorp Home & Contents Insurance Calculator can help you get an idea of the estimated replacement cost of your home and contents. Or try calculators like the Understand Insurance Building calculator to estimate the value of your home.
- Don’t set and forget. You might take out a home and contents policy when you first buy your home that fits you perfectly. But every time you upgrade your oven or buy a new laptop, the value of your contents increases. The same goes if you renovate or upgrade your home. Before you renew your policy, consider how the value of your home and contents might have changed over the past year. The Suncorp Home & Contents Insurance Calculator can be used to calculate the value of your contents, too.
But every time you upgrade your oven or buy a new laptop, the value of your contents increases.
Hopefully, you don’t ever need to make a claim for your home and contents. But, if you’re well prepared and covered up to the correct value, you’ll probably have a much better experience.
*The information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries. Insurance is issued by AAI Limited ABN 48 005 297 807 trading as Suncorp Insurance. Information provided is general advice only and has been prepared without taking into account any person's particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. Consider the Product Disclosure Statement before making a decision about this insurance.