Even if you have a fair idea of the type of insurance coverage you need for your home and your belongings, selecting the right provider can be a tough ask. The sheer amount of advice available, both on the Internet and from friends and family, can get overwhelming.
Comparing insurance quotes from major home insurance companies is one way to assess your options, but there are a few things to consider when making a comparison.
How do you go about getting the home insurance policy that’s right for you?
It might be easy to think that any Australian insurer will offer a policy that suits your needs. However, your home insurance policy should be finely tuned for your personal living circumstances and not every insurer will be able to offer such a nuanced policy.
Some insurers may only offer coverage for select incidents, while others may not be flexible in their coverage limits. But you don’t need to pull out a list of home insurance providers and start checking what each provider offers. Instead, you can start by asking your neighbours about their insurance policies since they will require a similar type and level of coverage.
Long-term residents of your area may know more about the various factors affecting local home insurance rates as well as the frequency of disasters like floods or bushfires. Your local council office may also be able to provide this information.
When you have all the details you need, you can start making a shortlist of insurance providers who offer the best options for specific incidents that relate to you. Consider getting in touch with your preferred insurance provider to see whether they can provide a customised quote/policy that’s specific to your needs.
How do you choose the right home insurance coverage?
When choosing a home insurance policy, you need to decide whether you’d like it to cover the total replacement cost of your home or a predetermined “insured sum”.
The first option involves providing an estimate of what it might cost to renovate or rebuild your home after a disastrous event which is covered by your home insurance policy. Since this type of policy covers actual costs, and there isn’t a predetermined maximum limit on the coverage, you are less likely to be underinsured. Keep in mind that the rebuilding cost will likely rise with time, as it is important to factor this into your estimate.
Alternatively, you can provide an estimate, called the insured sum, of the maximum cost of rebuilding your home and buy a home insurance policy that covers this amount. If the actual rebuilding cost exceeds the insured sum, you will end up being underinsured as your insurer is unlikely to pay the increased costs. As your insurance policy’s coverage already takes into account the excess you’ve agreed to pay, you end up bearing a greater share of the renovation expense if the insured sum falls short of your estimate.
Finalising the home insurance policy
Once you have an understanding of the incidents your home insurance policy should cover and the amount of coverage you need, you can compare home insurance quotes online to see which insurance policies meet your requirements.
You may also want to read the insurer’s Product Disclosure Statement (PDS) to get a better idea of their limits, exclusions, and the kinds of damages they cover. This can help you gauge the comparison more accurately and spot any variations between two quotes more quickly.
Once you are clear about what you expect from the insurer and what the insurer will deliver, consider having a detailed conversation with the provider to clarify any questions you may have. Such questions can cover aspects like choosing coverage for your possessions or buying additional coverage for specific incidents. You can finalise the home insurance policy based on how satisfied you are with the insurer’s responses and speak to other insurers if necessary.