We’ve all seen the devastating impacts that bushfires have on Australian communities; most notably, the 2009 Black Saturday bushfires, the 2015 Great Ocean Road fires and the 2019-2020 East Gippsland bushfires. Many people lost everything.
Luckily, in most cases (whether it’s a bushfire, house fire or flood event), people have insurance in place to help get them back on their feet. But there’s an underlying issue that many individuals aren’t aware of – underinsurance.
The reality is that most people have no idea of the accurate replacement value of everything they own, and end up being under insured as a result. In fact, MCG Quantity Surveyors have found that a staggering 83% of Australians are underinsured on their property!
We want to help you avoid this situation. So, let’s take a look at what underinsurance is all about, and how you can prevent underinsurance impacting your important insurance claims. Through our insurance partners, Steadfast, we have also included links to handy insurance calculator tools, so you can check that your current building and contents sums insured are adequate.
What is Underinsurance?
Many homeowners don’t have an accurate understanding of the replacement value of their home and the other assets they own. As a result, these homeowners end up being underinsured – meaning they are insured for less than the true value of the assets that they own. The Insurance Council of Australia has also calculated that approximately 23% of Aussie households don’t have home building or contents insurance at all!
There are many reasons why individuals are underinsured and don’t have enough insurance, with the leading factors being:
- An underestimation of the value of the assets that are owned
- A lack of education in insurance processes and how insurance works
- The belief that insurance is too expensive and not worth it
What Are the Consequences of Being Underinsured?
When you’re underinsured, not only are your assets not protected, but you face the potential of being significantly out of pocket should you have to rebuild your home and replace the contents inside. You also place yourself and your family at risk of going into debt as a result of paying for the cost of rebuilding.
How to Check If Your Home and Contents Are Adequately Insured
In order to avoid being underinsured, you’ll need to ensure that you have a sum insured that accurately reflects the replacement costs of your home and the assets you own. To confirm that the sum-insured of your current building and contents is accurate, we strongly encourage you to take advantage of sum-insured calculator tools.
Most people have no idea what the replacement value of everything they own is and end up being under insured as a result.
Understanding the accurate value of your home and contents will give you the ability to take out the right level of coverage, and avoid being underinsured.
Sum-Insured Calculator Tools
Sum-insured calculator tools aren’t just for those who have recently purchased a home or revamped their house with new white goods; because the value of your property is constantly changing over time, we strongly encourage all homeowners to regularly review the sums insured of their property.
The insurance calculator will provide you with the estimated replacement costs of your home building and contents based upon the information you put into the calculator – it’s that simple!
Please note that the information provided in this article is general in nature and should not be taken as advice. For further clarification regarding underinsurance and appropriate levels of insurance coverage, we recommend getting in contact with our BlueRock General Insurance team for a free consultation.