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Home underinsurance basics
- Most home insurance providers require you to choose your own sum insured, which can be hard to estimate yourself.
- Building costs have risen substantially in recent years and outpaced many self-nominated sum-insured policies, leaving many more Australians underinsured.
- ANZ Home Building insurance policies include a Safety Net of up to 25% on top of your building sum insured, if the cost of rebuilding or repairing your home exceeds your building sum insured.
What is home and contents insurance?
Home and contents insurance helps cover the cost of repairing or replacing your house and your belongings when something goes wrong. It may include:
- Building insurance – helps cover the cost of repairing or rebuilding your home (house frame, foundations, roof, fixtures, fittings, shed, pool etc.).
- Contents insurance – helps cover your furniture, furnishings, valuables, personal possessions and unfixed household goods.
- Landlord insurance – helps cover the cost of repairing or rebuilding your investment property, plus costs relating to your tenant such as failure to pay rent or malicious damage.
If you own an apartment, you might have some building insurance through your strata scheme. Otherwise, it’s your responsibility to arrange your home and contents insurance, to help ensure you have sufficient cover in place.
Why you may benefit from home and contents insurance
You only need to think about the number of storms, floods and bushfires we’ve seen in recent years to see the importance of home and contents insurance.
Plus, there’s always the possibility of household-specific events that could prove very expensive for owners – like burst water pipes, fallen trees or electrical fires.
Home insurance can play a valuable role in helping you reduce financial distress if any of these events happen to you.
How can you help avoid underinsurance?
According to the Insurance Council of Australia (ICA), some common causes for underinsurance are:disclaimer
- Guessing how much it would cost to repair, rebuild or replace property and contents.
- Not accounting for upgrades to your home and belongings.
- Increased building costs.
- Supplementary costs (e.g. cost of demolition, clean-up, asbestos removal, council applications, architect, and surveyor services, and even the cost of temporary accommodation during a rebuild).
- Not accounting for all your assets.
To help you check your sum insured is sufficient to cover the cost of a rebuild, the ICA have an online Building calculator and Contents calculator.disclaimer
How does sum insured cover work?
Sum insured covers the cost of repairing or rebuilding your home building and contents following an insured event up to the insured amount that you have nominated (the ‘sum insured’), or limits set out in the policy.
ANZ Home Building insurance includes a safety net of up to 25% on top of your building sum insured, if the cost of rebuilding or repairing your home exceeds your building sum insured. For example, if your building sum insured is $300,000 and a widespread disaster leads to a high demand for building services increasing your rebuilding costs, CGU could provide up to $75,000 on top of your building sum insured (up to $375,000 of cover in total) to help cover those extra costs.
ANZ Home insurance helps to cover additional costs you may not consider when assessing your own sum insured, for example the costs of alternative accommodation if you’re unable to live at home as a result of an incident that is covered.disclaimer
For full details on what’s covered read the ANZ Home Insurance Product Disclosure Statement – issued by CGU Insurance.
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