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Why you should compare home insurance

Home insurance can let you live your life with peace of mind, knowing that even if disaster were to strike, your home and possessions can be repaired or replaced without having to dig too deeply into your wallet. Home insurance can also be a necessity for some home owners, with some mortgage lenders requiring that borrowers take out a home insurance policy over the property they’re purchasing as part of the home loan approval process.

Here’s why it’s important to compare the different home insurance options and make a more informed decision:

You can choose a policy that matches your needs

Every home is different, and so is every home insurance policy. It’s important to compare your options so you don’t miss out on coverage and features you want, or find yourself paying for features and benefits you’re unlikely to use.

Some of the main types of home insurance include:

  • Home insurance – covers damage to your home, such as from fire, floods, or vandalism
  • Contents insurance – covers the possessions in your home if they are damaged, destroyed or stolen
  • Home and contents insurance – packages two kinds of insurance cover together
  • Landlord insurance – a specialised type of home insurance that covers damage to your investment property, as well as loss of income and tenant-related risks.
  • Renters insurance – a specialised type of contents insurance for tenants, which also covers selected rental-related expenses.

The cheapest policy won’t always provide the best value

There’s nothing wrong with wanting to save money on your home insurance. However, as the old saying goes, you may get what you pay for.

Cheaper home insurance policies may have more exclusions and may not offer as much support when you need it most. There may also be terms and conditions in the PDS that could snag you in certain circumstances.

Be sure to look at your policy carefully before you sign up, and check if you’re covered to a degree you’re comfortable with. For example, if you live near a river, you may decide it’s worth paying a bit more for a home insurance policy that includes flood damage.

Not all insurers are the same

Even if you take price and value out of the equation, you may still want to think about which insurer you’d like to take out home insurance with. Some insurers operate as part of big banks and financial institutions, while other smaller insurers only provide specialised types of cover.

Consider what type of customer service you’d like from your insurer. For example, some insurers have branches that you can visit to discuss your policy in person, while others mainly operate online or over the phone.

Consider checking reviews and ratings of different insurers. For example, feedback from satisfied or unhappy customers may tell you which insurers require extra paperwork, and which ones pay out claims quickly and efficiently.

How to compare home insurance

Ready to start looking for a home insurance policy? To help you get started, consider asking yourself the following questions:

1. How much is my home and/or its contents worth?

A key part of working out the cost of any home insurance policy is working out the value of what you’re insuring. Try to be accurate, as overvaluing could mean paying higher premiums, while undervaluing could leave you underinsured if disaster strikes. Also, consider if there are any special items that you’d like to insure separately to the rest of your home’s contents.

2. What kind of insurance cover do you want?

Are you looking for home insurance, contents insurance, or both? Are you a landlord, a renter, or neither? Do you want your home’s contents sum-insured up to their current value, or would you consider potentially paying a bit more for “new-for-old” total replacement cover? Are there any extras or exclusions in the cover to think about?

3. What kind of insurer are you looking for?

Does your bank also offer insurance, and could offer you a bundled discount? Do you want an insurer with branch offices you can visit, or would you prefer to handle things online and over the phone? Have your friends or family had good or bad experiences with certain insurers?