Home Insurance

As much as you may try and avoid being materialistic and falling into the trap of consumerism, your home is a very important possession, and no matter what emotions or feelings of security you attach to it, it is still just a thing. However, your home strikes a unique balance between being just another possession and being an integral part of your family life and there is nothing wrong with setting store by protecting it from damage.

A home insurance policy protects your property by paying a benefit if you home is damaged by a storm for example, and contents insurance covers the possessions inside your home in case of burglary. While you can apply for a home and a contents insurance policy separately, you can often combine the policies with the same insurer to qualify for a discount.

When it comes to your home and contents insurance it is important to remain vigilant about your policy to make sure you are getting the best deal, and that you are adequately covered. Therefore, use this home and contents insurance guide to help you assess your current policy, and understand new changes, policies and offers available in the industry.

How to Check Your Home and Contents Insurance

While you have done all the right things by insuring your home and contents to protect the security of your family’s way of life, it is important to know that according to Choice surveys in 2008 and 2009, since then premiums for home and contents insurance have gone up by an average of 17% where the price increases across insurers range from 3% to as much as 62%.

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This increase in price is due to the wider range of insurance coverage which is now available. You may have also seen your insurance premiums go up because there is now more accurate data available for pricing up your policy. To make sure your home is adequately insured and that you are getting the best deal on your insurance, follow these few steps to assess your policy:

1 – Check whether you are underinsured

As many as 80% of Australian homes are underinsured, which means you could have undervalued your possession, or the cost to rebuild or repair your home, and find yourself without enough of an insurance benefit payout to cover an accident or emergency at home.

In some cases, an insurance company will offer you full coverage to rebuild your home if it is destroyed, even if you were underinsured, but you will need to check whether you are with one of these select insurance companies.

To make sure your contents are insured to their true replacement value, go through every room in your house, and out to garage and estimate how much it would cost you to replace every item – not what you think it’s worth, but what it would cost to buy a new one. This includes counting everything from crockery and cutlery to manchester, books and clothing.

2 – What sort of damage are you covered for?

There can be a lot of fine print in an insurance policy, so make sure you know what you are covered for, and whether you can claim for only defined events, or all accidental damage:

• Defined events insurance policies will only pay a benefit for damage from a storm, fire, theft and a range of other events specified in the policy.
• Accidental damage policies will include coverage for all defined events, plus other accidents such as tearing a hole in the carpet moving furniture, or knocking a ladder through the window while cleaning the gutters.

3 – Know why you need both home and contents insurance

You’re probably already paying insurance premiums for your car, a life insurance policy, income protection and a range of other safety nets, so you may be wondering why you need two insurance policies on your home. Well you do need full coverage on your home because insuring your home covers you for damage in the event of bad weather, accidental breakage and damage from a burst pipe for example. In most cases the highest value claims are for fire and legal liability.

When you have contents insurance you can claim for damage to your possessions from severe weather such as water damage, or for theft, and the highest claims for contents cover are also usually for legal liability.

Therefore, with both a home and contents insurance policy you don’t have to worry about damage to your home through natural forces, your own clumsiness or because you were the unlucky target of a burglar.

4 – Know how to get the best deal

While home and contents insurance are a necessary part of life, that doesn’t mean you can’t save on your premiums by:

• Asking for a discount. Often all you have to do is ask, and if you have been with your insurer for a number of years or you have several policies with them, you can secure a discount on your premiums. You may be able to qualify for further discounts if you are a senior, or you buy your policy online, or you install higher levels of security such as a monitored alarm.
• Shopping around. You can save hundreds of dollars on the same policy simply by comparing options between insurers. That is why the rest of this guide will show you how to compare insurers and insurance policies to get the best deal, and the best coverage.

Comparing Australian Insurers

Saving several hundred dollars a year while still insuring the safety and security of your family home is worth shopping around for, but making sure you compare the same features with all of the insurers you talk to, and understanding all of the fine print in each policy you are quoted for is without a doubt time consuming.

That is why there are 26 of the top Australian home and contents insurance providers compared here in this guide, to give you an idea of which policy is the best value, the most comprehensive and which is worth pursing for your circumstances. Your choice of insurer and policy will depend largely on where you are in Australia, as the levies and charges can differ significantly from state to state.

For example, in response to the 2009 Bushfire Royal Commission, the Victorian government will replace the insurance based fire services levy with a property based charge, from 1 July 2012. The fire services levy is a tax on insurance policies to fund fire brigade services and with Victoria removing the levy, only New South Wales and Tasmania still apply a fire services levy to their home and contents insurance policies.

This guide will also help point out areas of home and contents insurance policies where many Australians are underinsured, are not covered for replacement value of items, and are not covered for flood damage for both the property and their possessions.

The insurers compared here may include your current insurance policy, or a company you weren’t even aware of, which is why such a diverse comparison has been completed between:

• AAMI
• ALLIANZ
• ANSVAR Insurance
• ANZ
• APIA
• Australian Seniors
• Budget Direct
• CGU
• Comminsure
• GIO
• HBA
• HBF
• ING
• Mutual Community
• NRMA
• QBE
• RAA
• RACT
• RACV
• Real Insurance
• SGIC
• SGIO
• Shannons
• Suncorp Bank
• The Buzz
• Westpac

The Best Australian Home and Contents Insurance

While the best insurance policy is the one which suits your individual needs in the best possible way, to compare the range of policies available around Australia, insurers are compared here based on quotes they provided for 16 different addresses across the country, so two addresses from each state or territory were assessed.

For each address, three building quotes and four contents quotes were compared, where cover for fusion and accidental glass breakage were also quoted for if not included in the policies. Compared policies include defined events policies which cover all events listed in the policy, and accidental damage policies which cover any accidents, outside of the exclusions on the policy.

Quotes were provided on four types of homes:

1. A two bedroom semi or terrace home. In this scenario the oldest owner is 30 years old and the property is around 50 years old. In the ACT and New South Wales the building was insured for $270,000 and for $230,000 in other states and territories. In the ACT and New South Wales the contents were insured for $50,000 and $40,000 in the other states and territories.
2. A two bedroom apartment. Where the oldest owner is 30 years old, the contents of this property were insured for $50,000 in the ACT and New South Wales, and $40,000 in the other states and territories.
3. A three bedroom single storey house. For this quote the property is around 25 years old and the oldest owner is 45 years old. The property is insured for $365,000 in the ACT and New South Wales, and for $320,000 in the other states and territories. In the ACT and New South Wales the contents are insured for $75,000 and for $65,000 in the other states and territories.
4. A four bedroom two storey house. This property is approximately five years old, and the oldest owner in the quote is 40 years old. In the ACT and New South Wales the building is insured for $545,000 and in the other states for $500,000. Contents were insured for $100,000 in the ACT and New South Wales and $90,000 in the other states and territories.

The best insurance policies also include premiums for the two addresses in their state or territory which are less than or equal to the median value in that state or territory. Home and contents insurance policies are then scored based on their policies and their customer satisfaction ratings.

The following policies did not rank amongst the best in Australia because they do not include fusion cover:

• The Buzz Insurance Base Pack
• The CGU Fundamental policy.
• HBA Essentials.
• Mutual Community Essentials.
• Allianz Surecover.
• Westpac Essential Care.

Also, GIO Platinum insurance and Suncorp Bank Platinum cover have minimum insured amounts required which were above the examples quoted for. Shannons Insurance only offers home and contents insurance to motoring enthusiasts so limits its accessibility.

In the ACT:

• The best home insurance polices with accidental damage are from CommInsure and ING.

• The best home insurance policies covering defined events only are from ANZ and ING.
• The best contents insurance policies with accidental damage cover are the Ansvar MaxiCover policy and ING.
• The best contents insurance policies for defined events only are the Ansvar HomeCover policy, QBE and Suncorp Bank Classic policy.

In New South Wales:

• The best home insurance polices with accidental damage are from ING and QBE.

• The best home insurance policies covering defined events only are from ANZ and ING.
• The best contents insurance policies with accidental damage cover are the GIO Classic Cover, NRMA, QBE and the Suncorp Bank Classic.
• The best contents insurance policies for defined events only are from the NRMA and QBE.

In the Northern Territory:

• The best home insurance polices with accidental damage are the Ansvar MaxiCover, ING and Suncorp Bank Classic.

• The best home insurance policies covering defined events only are the Ansvar HomeCover and ING.
• The best contents insurance policies with accidental damage cover are from ANZ and ING.
• The best contents insurance policies for defined events only are the ING and Westpac Quality Care policies.

In Queensland:

• The best home insurance polices with accidental damage are from ING, QBE and the Westpac Premier Care policy.

• The best home insurance policies covering defined events only are the Ansvar HomeCover, ING and QBE policies.
• The best contents insurance policies with accidental damage cover are from ING, QBE and Suncorp Bank Classic.
• The best contents insurance policies for defined events only are the Ansvar HomeCover policy, QBE and Suncorp Bank Classic policy.

In South Australia:

• The best home insurance polices with accidental damage are from CommInsure and ING.

• The best home insurance policies covering defined events only are from ANZ and ING.
• The best contents insurance policies with accidental damage cover are the Ansvar MaxiCover policy, QBE and Suncorp Bank Classic.
• The best contents insurance policies for defined events only are the Ansvar HomeCover policy, QBE and SGIC.

In Tasmania:

• The best home insurance polices with accidental damage are from CommInsure and ING.

• The best home insurance policies covering defined events only are from ANZ and ING.
• The best contents insurance policies with accidental damage cover are the Ansvar MaxiCover policy and ING.
• The best contents insurance policies for defined events only are the Ansvar HomeCover policy, NRMA and QBE.

In Victoria:

• The best home insurance polices with accidental damage are from ING and QBE.

• The best home insurance policies covering defined events only are from ANZ and ING.
• The best contents insurance policies with accidental damage cover are the GIO Classic, QBE and Suncorp Bank Classic policies.
• The best contents insurance policies for defined events only are from QBE and Suncorp Bank Classic.

In Western Australia:

• The best home insurance polices with accidental damage are from CommInsure and ING.

• The best home insurance policies covering defined events only are from ANZ and ING.
• The best contents insurance policies with accidental damage cover are the GIO Classic, HBA, QBE and Suncorp Bank Classic policies.
• The best contents insurance policies for defined events only are the Ansvar HomeCover policy, GIO Classic and SGIO.

How much home insurance do you need?

Once you have compared the insurance company options in your state, to be able to accurately compare the quotes and premiums for your circumstances you will need to calculate the right level of cover. When you seek a quote for insurance, the insurer will ask you for your Sum Insured which is the value you want to insure your home for.

To avoid compounding a disaster such as a burglary or storm damage, you will need to accurately estimate the cost of rebuilding or repairing your home, as well as the costs to replace your possessions. Your estimates will also need to take into account new building standards which come into place, for example, after the Victorian bushfires, new building codes increased the cost to fully rebuild a home by around 50% compared to before the fires.

Some insurers will protect you in a time of crisis even if you underestimated the cost to rebuild your home, covering you for a full rebuild if your house is destroyed, even if your policy amount wouldn’t be enough. For example, AAMI, ANZ, CommInsure and ING offer this full coverage.

Alternatively, other insurers will pay more than you are insured for if your home is destroyed, including:

• From 15 December 2010 Budget Direct will pay 25% more than your Sum Insured.
• GIO will pay up to 30% more than your SI on the Platinum coverage and 25% more on a Classic policy.
• QBE will pay 30% more than your SI.
• RACT will pay up to 25% more than your SI.
• If you pay an additional premium, Suncorp Bank will cover you for up to 30% more than your SI for a Platinum policy and up to 25% more for a Classic policy.
• The Buzz will pay up to 25% more than your SI on a Buzz Plus policy.

Features You Need in Your Home and Contents Policies

While it is important to read the fine print and find out about exclusions to your coverage, and instances where you cannot claim, your comparison process will also allow you to add in any extra features you think would benefit your circumstances. For example, you could add cover for:

• Burnout of electric motors, also known as fusion cover. You may find that the motors covered by your home and contents insurance have an age limit applied, so make sure yours will be covered by the policy limit.
• Floods. There is no standard definition of flooding in the insurance industry so you will need to verify exactly what sort of damage you are covered for. Current flood definitions used include: flash flooding, storm water and rainwater runoff where water is produced in a large amount, but for a short period of time; riverine or inland flooding is caused by rivers, creeks or artificial catchments such as dams overflowing after prolonged rainfall; the sea level or a storm surge is any flood of seawater.
• Pet cover. You can add your pets to your home and contents insurance policy so that any damage they do to the house and contents is covered, and so too are their vets bills.
• Discharge of mortgage. If your home is a total loss, there can be legal costs involved with discharging the mortgage and your home insurance can cover that.
• New family member. Some insurers such as HBF offer a new family member bonus where your contents insurance coverage automatically increases by $5,000 when you have a child, and you don’t have to reapply.

Understanding the Fine Print

Before you sign on the dotted line of your chosen home and contents insurance policy, make sure you read and understand every part of the policy document so you are clear about your coverage and any limitations. For example, something which appears to be covered in one section of your policy document may be clearly excused in the next, so don’t be afraid to query any issues with your insurance agent – in some cases fire damage is only paid for if there is a flame, so if an iron scorches an item of clothing, or a pot from the stove scorches your bench top you may not be covered.

Also make sure you are aware of the instances where your insurance company may refuse to pay a claim, as these can include if you are behind on paying your monthly premiums, or because the event you are claiming for too place while you were away and you didn’t notify your insurance company – often you will have to notify your insurer if you are away for longer than 60 days.

While there are new Commonwealth laws against unfair contract terms in standard contracts, insurance policy contracts are not covered under this law. This means you need to continue to do your due diligence in checking every detail of the contract.

How to Get the Most Out of Your Home and Contents Insurance

To help you choose and manage your home and contents insurance as easily as possible, and remain organised and prepared in case of a claim, there are a few things you should do during your search, and as a policy holder, including:

• Keep all correspondence. Keep a record of all email and phone conversations with your insurer where you may have queried a condition or asked for a more detailed definition of coverage, in case there is a future dispute about the issue.
• Get new insurance quotes when buying or building. If you are building or buying a new home, don’t automatically switch your old policy to your new home and up the amount because you may be moving to a flood prone area or one vulnerable to other risks, so make sure you shop around for the best deal on your new circumstances.
• Don’t automatically renew your policy. Before you renew your home and contents insurance for another year, obtain several quotes from other insurers to check you are still getting a good deal. If not, ask your current insurer to match the price, and if they can’t you are not locked into a contract and can take advantage of other insurers offering new customer discounts for example.
• Always shop around. Whether you are moving house or your policy is coming up for renewal, always obtain several quotes from different insurers, of different sizes as the difference in premiums can be as much as $800 per year.
• Ask for a discount. Most insurers will offer you a discount on your insurance if you combine your home and your contents policies. You may also qualify for a discount if you are a senior, or you can choose a higher excess amount, and pay a smaller monthly premium, remembering you need to pay this excess amount to make a claim.