MoneySmart says check your insurance cover

From

ASIC’s consumer website, MoneySmart, is encouraging people to check they have appropriate insurance cover.

The Bureau of Meteorology predicts a high risk of tropical cyclones this summer . The long-term average is twelve cyclones each season. There is also the ever-present risk of bushfires.

ASIC’s Senior Executive Leader Financial Literacy, Delia Rickard said, ‘To check your insurance covers you properly, start by checking your policy or contacting your insurer and asking them exactly what events you are covered for and what is excluded, for example damage from flooding.’

‘It’s also very important to check you have enough cover. Some home and contents policies may not cover damage from floods, or may have caps on how much you can claim for flooding and other events’, said Ms Rickard.

‘Make sure you have enough home insurance cover by using online calculators on insurance websites to estimate the total cost of rebuilding your home. Try a couple of calculators to compare because the results can differ. Be sure to shop around for appropriate cover and quotes. Phone potential insurers, and ask lots of questions’, Ms Rickard said.

Home insurance policies are usually either ‘sum-insured’, ‘extended replacement cover’ or ‘total replacement’ policies.

Sum-insured cover is more common and will cover you up to a set amount that you choose. Extended replacement cover policies have a sum-insured amount, but will provide a limited amount of extended cover in the event of a total loss. Total replacement cover covers the costs to rebuild your home to the standard it was prior to the event, thus significantly reducing the risk of being underinsured.

There are a number of variations to these basic models, so read the fine print and ask as many questions as possible when comparing insurers. The key is to be sure your policy covers all the costs of rebuilding your home.

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