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Under Insurance - Are you at risk?
Posted by admin | Posted in Forex Power | Posted on 26-08-2007
A report by the Australian Securities and Investments Commission (ASIC) examining the under-insurance of home buildings in Australia found there are significant levels of under-insurance by Australian homeowners, especially against current rebuilding costs.
The ASIC report, ‘Getting home insurance right – A report into under-insurance’, was commissioned after the Canberra bushfires and suggests that Canberra homeowners affected by the fires were underinsured by between 27 per cent and 40 per cent on average.
The report also noted research which found that at least 27 per cent, and possibly as many as 81 per cent of homeowners are under-insured by 10 per cent or more. It also found that 24 per cent of consumers did not increase their insurance following renovations costing between $20,000 and $60,000. Source: Australian Securities and Investments Commission (ASIC) Fido 2005 Is your home underinsured? www.fido.gov.au/underinsured (accessed 8/09/2005)
The advice in the report suggested the following points:
Even if you think you have enough insurance, you should check your level of cover, particularly if you haven’t increased it for a number of years;
Online calculators are a practical way to work out how much to insure for but not all calculators are the same. The best calculators ask 20 to 30 questions about your home and take all the features identified into account in providing an estimate;
If you think you can’t afford to increase your cover, consider increasing your excess and reducing the premium, or shop around for the cheapest cover by using websites to obtain online quotes and compare prices;
If you have calculated your level of cover by taking the purchase price of your property, and deducting the value of the land, then you are at risk of being under-insured. This method generally produces a figure that is much too low; and
If you are doing renovations you need to increase your level of cover immediately.
Don’t wait until the next renewal.
