Home' Navy News : November 25th 2010 Contents shop around and get quotes from
different insurers; and
ring potential insurers and ask lots
of questions, including what events
are specifically excluded.
See www.fido.gov.au or call ASIC's
infoline on 1300 300 630 for more infor-
mation on insurance. Email ADFcolumn@
asic.gov.au if you have suggestions for
future topics you'd like covered.
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November 25, 2010
COULD you afford to
rebuild your home if it was
Having your home dam-
aged or destroyed by a flood or fire
would be devastating. While these
events are unpredictable, one thing you
can control is your insurance.
Home insurance helps protect you
against things that are out of your
control, such as damage from natural
disasters like storms and bushfires. It
covers the cost of replacing or repair-
ing your home, including fixtures and
fittings, such as lights and carpets.
If you have a mortgage, you are
probably required to have home insur-
ance as part of your home loan.
When choosing a home insurance
policy, work out if you want 'total
replacement' or 'sum-insured' cover.
Total replacement policies general-
ly include all the costs to rebuild your
home to the standard it was before it
Sum-insured cover will only cover
you up to a set dollar amount.
If you select sum-insured cover
then it is important that you know
how much money you would need to
rebuild your home if it was destroyed.
There are a number of variations
to these two basic models, so read the
fine print and ask as many questions as
you need to in order to make sure you
understand what is being offered.
Contents insurance covers the cost
of replacing or repairing your unfixed
household items and possessions. This
includes furniture, clothes, appliances
When working out how much con-
tents insurance you need, start by list-
ing all your belongings and calculating
what it would cost to replace them.
The type of cover you choose will
affect what you pay. Some policies
cover you for particular events while
others cover any accidental event.
Contents insurance policies usu-
ally cover you for either the value of
your belongings or what it would cost
to replace your belongings with new
items -- this type of cover is known as
'new for old'.
Risk of underinsurance
Underinsurance is when you don't
have enough insurance to cover all the
costs of rebuilding or repairing your
home and replacing its contents.
This could be because:
It's hard to estimate what it costs
to rebuild a home. In the 2003
Canberra bushfires, a common con-
tributor to underinsurance was peo-
ple not including the cost of clear-
ing their property before rebuilding
in their estimates.
Are you covered this bushfire season?
DEVASTATION: Home insurance
should factor in things like the cost
of clearing the property prior
Photo: CPL Ricky Fuller
Underinsurance can compound the tragedy of
losing your home to a natural disaster,
ASIC Chairman Tony D'Aloisio explains.
Your insurance policy may be old
(over three years) and you may not
have updated the level of cover.
If there is a mass disaster it can
cause huge and unpredictable
increases in building costs.
You may have made improve-
ments to your property, which have
increased the value of your home.
Wherever you live, your home
insurance needs to be enough to cover
the costs of rebuilding your home, but
this is particularly important if you live
in an area prone to bushfires.
It is estimated that 13 per cent of
homes that needed rebuilding or sig-
nificant repair after the 2009 Victorian
bushfires were not insured.
Does your policy provide enough
insurance to cover the cost of rebuild-
ing your house and any extra costs you
Tips to consider
There really is no substitute for
gathering all the information you need
to make sure you have the right insur-
ance cover. Follow these three tips and
you'll be on the right track:
use at least three online insurance
tools or web calculators and com-
pare the results;
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