Protect your family against financial loss


Review your insurance values carefully, to avoid underinsurance. Whether it's home, contents, or life insurance, most Australians have insufficient cover. A recent study by the Australian Securities and Investments Commission (ASIC) found that 21-81% of consumers were underinsured by 10% or more, in the event that they had to rebuild their home. Because the responsibility of estimating rebuilding costs rests with the homeowner, a correct estimate is imperative, but can present challenges.

Online calculators are available to assist with making sure you're home insurance is adequate. However, talk to a builder in your area to check the calculation results are accurate. Be sure you take into account the continuous rise in building costs, and re-evaluate your insurance cover on an annual basis. The ASIC study found that while the CPI increased 17% between March 2000 and March 2005, building costs rose by 33%.

Insufficient cover can creep in over time. So even if you correctly estimate your cover in the first place and then annually increase the sum insured, it can still lag the actual rise in building costs. ASIC research found that while the CPI increased by 17% between March 2000 and March 2005, building costs in fact rose by 33%.

But it's not just home insurance, where Australians have insufficient cover. Contents cover often fails to recognise new purchases made by a household, or keep up-to-date with replacement costs. Underinsurance is also a problem in life insurance. A study conducted for the Investment and Financial Services Association found that 60% of Australian families with dependent children don't have enough life insurance cover to look after their family for a year.

Understand your policy. Is your policy for a fixed sum-insured, a sum-insured plus margin for increased costs, or a total replacement policy? Which policy is right for you?

Four common reasons for under-insurance include:

  • A gradual accumulation of possessions
  • Not accounting for upgraded assets
  • Lack of understanding of local risks
  • Increased building costs, and
  • Lack of understanding of policy types and exclusions.

Before you renew your insurance, review the replacement value of your property and your contents and adjust your cover accordingly. The best way to make an inventory of our contents, including furniture, valuables, jewellery, computers, and electrical goods is take a walk through each room at home, take photographs, and make a list of your contents and their replacement value. Make sure you are covered accordingly and take careful note of policy terms concerning high value items and exclusions.

Has the cost of rebuilding your property changed, since your built or purchased your house? Check online calculators, or ask a builder for advice. Have you renovated or improved your property since your policy was taken out? Adjust your insured value to include the value of improvements.

Flood maps are available from most local councils that have studied, analysed and modelled the risks by showing areas of inundation for 1:100 year flood events. These maps highlight geographic areas known as flood zones - those areas at greatest risk of inundation. Your insurer also has these maps and will calculate your premiums accordingly. If your assets are at risk of flooding you should consider a policy that covers all types of flood damage.