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Home insurance provides homeowners with peace of mind that they’ll be covered in the event of unforseen circumstances or disaster. However, some alarming data analytics suggest that, despite having taken out insurance policies, four out of five Australian homeowners and renters are underinsured. So what are some of the factors that lead people into false security? Well, if you have a home insurance policy, you might want to make sure you’re not a victim of any of these 4 most common mistakes.
1. Not having a current property valuation
One of the reasons homeowners are underinsured is because the value of their home is not up to date. If there has been changes to the building codes and regulations, this can impact the rebuild costs if the property is severely damaged. Getting your property valued regularly ensures that your home insurance policy is in alignment with contemporary rebuild costs.
2. Not including renovations or upgrades
Renovating your home means you add value to the property. If you fail to update your insurance policy to include any improvements you have made, you leave yourself vulnerable to potentially huge costs, as those upgrades will not be covered. To ensure you have adequate coverage, always make sure you get a property valuation done after you renovate, or contact your insurer to discuss the details of your policy reflect those extra costs.
3. Failure to include an accumulation of possessions
Everyone accumulates ‘stuff’ over the years, but each year it’s a good idea to keep track of exactly what you’re buying. Your contents insurance needs to be updated for new possessions, or else you risk walking away empty-handed in the event of some malicious act of fortune. Big-ticket items like a new lounge suit, bike, jewellery, fine china or any other prized possessions should all be included to make sure you haven’t exceeded your general contents coverage.
4. Not specifying particular items
Continuing on from possessions, it’s important to note that some particular items need to specified separately. This is particularly true for highly valuable items such as jewellery or watches. While none of us like to consider the thought of losing something sentimental, there’s at least some comfort in knowing you can be financially compensated for such a loss. Your ‘general contents’ insurance is usually only up to a certain amount, so it doesn’t take long until valuable items reach and surpass that. Furthermore, listing relevant items as ‘specified portable valuables’ means they are included in your policy for loss both inside and outside the home.
It just takes a little bit of consideration in order to get the best out of your home insurance policy. Mostly, it’s about being aware of your policy limits and how much your contents are insured for. It requires keeping track of all new, expensive possessions you may acquire, as well as documenting any home improvements you make so you can update the value of your property. Even if you don’t renovate, it’s still advisable to get the value of your property assessed regularly, just to ensure that your policy is still relevant to the potential rebuild costs in the event of loss or damages.