We’ve all heard stories about insurance claims not being paid out based on a technicality or some minor detail, and it always seems to be at the worst time in someone’s life. An unexpected disaster resulting in injury or damage to your property can be stressful at the best of times, but imagine not being insured enough to cover the cost of the most basic of repairs let alone sufficient to rebuild if required.
‘Australia is one of the most underinsured nations in the world’
According to a report by Lifewise, Australia is one of the most underinsured countries in the developed world. Being underinsured is having an insurance policy, but without enough value to cover your circumstances, and it’s estimated that Australians are underinsured to the value of around $1.37 trillion.
If you don’t regularly review your insurance valuations, then you could be underinsured. You might also be surprised by the significant shortfall you face, as being underinsured isn’t just as simple as making up the difference in value yourself. Many insurance companies could actually class you as a ‘co-insurer’ in the event of a claim and calculating the actual payout this way could leave you with a much smaller amount than you expect.
Getting the right level of insurance can be difficult and be plagued by misinformation and complicated jargon, but there is advice available if you contact your insurance broker, or there are tools such as an online insurance calculator to help you estimate the value you should be insuring for.
It’s not just homeowners at risk
With an increasing number of properties for rent in the Australian market, renters are also putting themselves at risk. At first, renters appear relatively low risk when it comes to home insurance, but after a disaster, renters can be left facing eviction or homelessness.
Unable to find a new rental after Hobart’s floods last year one renter said that “it was quite stressful not knowing where we were going to end up” after their landlord insisted that the house insurance was just there to cover the property and not the contents. That was the responsibility of the tenant as contents insurance was optional, leaving them with a potential bill of thousands of dollars, and with more and more investors going into the housing market, it seems that the gap between building and contents insurance is only going to get broader.
To help with some of the confusion, it might be useful to seek the advice of an insurance broker to assess and manage your risks, provide assistance with selecting the right insurance solution and deal with all the detailed technicalities.
An insurance broker can act on your behalf not just in putting your solution together but also as your advocate in the case of a claim, to assist, manage and help with settlements. They can create a risk management program for your business and provide you with appropriate advice.
All insurance brokers in Australia must have an Australian Financial Services Licence, or be an authorised representative of an AFS license so you can rest assured that they are putting your interests first and will prioritise you where there is a conflict with their interests.