An alarming 80 per cent of property owners do not have sufficient insurance coverage for their property according to data from the Insurance Council of Australia.
Some intentionally under-insure to save on cost, hoping that an event won’t happen. However, the majority of home owners and investors who have a shortfall on coverage, are unaware that they are under-insured.
Best practice is to complete an annual review of your insurance coverage to ensure that not only you have sufficient coverage, but also that the policy terms haven’t changed and that you are getting the most competitive price.
When reviewing your insurance cover consider the following:
• Do not include the land value in the insured amount.
• Have you made any renovations, alterations or additions to the property? These should be factored into the sum insured.
• What is the current replacement building cost? This is not market value, but the current cost of building the same structure. This value needs to reflect the costs involved in restoring the property to its existing condition, considering current building standards and codes, and factoring in rising costs due to inflation, labour, etc. To get an accurate estimate of replacement costs, we recommend that you speak with a quantity surveyor or builder. You may also find an online building replacement calculator.
• Have you included fixtures and fittings?
• Ensure that your landlord policy covers fixtures and fittings as these are not included in building cover (ie floor and window coverings)
• Damage caused by Pets
•Accidental and malicious damage
•Rent loss from day 1 (many policies start paying rent loss from 4 weeks)
• Compare the excess payable as these vary a lot