Know your Home Insurance

This mornings memo is going to look at some of the additional benefits payable under a home Insurance policy. We thought we'd start with your home then over the coming weeks look more in depth at your Business policy. I was taught very early on in my career that once you understand a home insurance policy better it is easier to pick up more technical covers. It's proven to be trued. My first job in Insurance was with GIO working in Toowoomba QLD. I spent over 40 hours a week doing nothing but home & contents, car and caravan insurance. It was a fantastic introduction to an industry that we are now so passionate about. It also helped that my first job paid more then reaching my career goal in my previous life as a broadcaster.

Whilst no one expects consumers to understand fully the In's and outs of their insurance it is important you have an understanding. It's for this reason people use Insurance Brokers. We are able to provide advice and answer any questions along the way. it is also our role to find out what your - how do we say it - 'Pain,' is. Meaning what is most important to you, what parts will you not compromise your protection on and what areas are you prepared to accept less cover. Working with a direct insurer does not give you this flexibility. Direct insurers serve an important purpose in the market don't get me wrong, I am eternally grateful to GIO for kicking my career off, but if you want impartial advice then only a broker can assist.

Your family home is your castle. It doesn't matter how big a business you have, if something happens to your home you tend to react in a more emotive manner. It's only natural it's your sanctuary for you and your family. Last week we discussed setting your Sum Insured right, but once you've done that there are other factors to consider like additional benefits. Under a Home & Contents policy you are generally covered for a number of events or as we call them 'Perils.' Under the Corporations Act all Home policies must have minimum specific perils. Some of these are Fire, Explosion, Lightning, Impact, Theft, water damage.

 

Then there are Additional Benefits. Once again when selecting your insurer make sure these benefits are 'Over and Above' your Sum Insured. Some policies will have additional benefits that are only payable if you have room within your Sum Insured. For example if your Building Sum Insured is $250,000 and you have a policy covering Additional Benefits only payable if the Sum Insured is not otherwise exhausted, then you need to make sure you add a buffer zone above the replacement cost. If $250K is the actual replacement cost you may want to consider insuring on this basis for potentially $300K - $350K in total.

 

The benefit of our AIMS specific policies is that all Additional Benefits are over and above the Sum Insured. Meaning if you've set your replacement cost at $250,000 you get over 30 benefits additional to this. It helps you in setting your Sum Insured correctly. When you look at some of these benefits you'll be surprised at the value within your policy. I'm using VERO's Superior policy as an example.

 

Within this policy you receive - over and above your Sum Insured (Not an exhaustive list)

 

- Cover for your contents away from your home. For jewellery this is up to $10,000 per item without listing, meaning you can go to Fiji on holiday and your Contents with you remain covered.

- Cover for additional building fees and related costs. If zonings change you may need to reapply to council or get surveyors on site.

- Spoilage of Food. We had a major breakdown of refrigeration at home the week of Christmas. A Considerable value in food was within the freezer that turned into a slush pool.
- Illegal use of credit cards. If someone breaks into your home and steals bank cards or phone SIMS you have cover for illegal use of these.
- Contents being conveyed to your new residence. How often do you have items broken by Removalists yet when you seek compensation they show you the waiver you signed? Our home policies have this is an additional benefit.
- Tax Audit. Yes if you are audited the policy can reimburse you accountants fees involved in an audit.
- Temporary Accommodation. This is a big one. If your home is unlivable after a claim for a natural event or other claimable circumstance then you have access to accommodation within a motel or apartment whilst your home is being repaired. This extends to your pets too.
- Discharge of Mortgage. If your home is lost after a fire and you pay back the bank with the proceeds of the claim any discharge of mortgage fees are covered by the policy.

Pphhhewwwww!!!

In the policy I am using as an example I've got about 29 more benefits, and this is only for the Material Damage section!

 

Yes under the Public Liability Section of your Home & Contents Policy you also have a number of Additional Benefits, including your own personal liability as a committee member of a social or sporting club. Also liability for motorised vehicles not requiring statutory registration. Like wheelchairs, mobility scooters and similar. Liability for injury caused by a pet may too be covered depending on the particular product.

 

We've looked back at a number of news events over the years and shake our heads at some people who do not obtain home & contents insurance. Even if you are renting, just take out contents. Often on the news you will hear stories of fires in homes whereby the tenants couldn't afford contents insurance. I used one example last year whereby cover for say $30,000 in a suburb in Brisbane was only $30 a month! (As an indication only) So for such a relatively small amount you have access to the same benefits. If every home had such policies in place then the impact on the public purse would be dramatically lessened. The Temporary accommodation benefit alone is a fantastic feature giving you time to recover and source other permanent accommodation.

 

 

Don't ever think 'it wont happen to me.' Consider your level of cover and what is appropriate for you. As a final example we personally have a home policy with a higher excess on building as we will only use it is a catastrophe situation. Our contents has a lower excess. This helps keep the costs manageable. But please at all times ask your adviser or broker whether the additional benefits are inclusive of the Sum Insured or in addition to. Get the right advice and product upfront so you are not stung when it is needed most.

 

*** This information is General in it's nature and does not take into consideration any one individuals personal circumstances. Information courtesy of VERO Home & Contents Superior AIM PDS V5959 active 10/01/2009 A.