When it comes to home and contents insurance, natural disasters reveal a simple truth: comprehensive coverage directly translates to greater peace of mind and better financial protection.
Home and contents insurance is only as effective as the features provided by the insurer and the level of coverage you choose. However, in the case of natural disasters like floods and bushfires, is there a general guideline that establishes a benchmark for how much your home should be insured for?
According to Jaime Pratt, Head of PM at VPM, the stress of property theft or damage can be reduced when you clearly understand what your home and contents insurance covers—whether it's partial or complete payment of your repair or replacement costs.
“Many homeowners are underinsured,” she says. “They, therefore, risk replacing or rebuilding some or all of the damage or loss at their own expense.”
While it’s difficult to put a number against the unknown regarding whether to opt for basic or full coverage and the inclusion of optional extras, it’s better to be over-insured.
General insurance coverage inclusions
In general, you’ll find that most home and contents insurance policies will cover these events and incidents:
* Natural disasters and other events such as fire or lightning damage
* Theft or malicious damage to your contents, including vandalism
* Damage caused by a sudden burst of water or other liquid
* The impact of unforeseen hazards, such as a falling tree
* Damages caused to your contents during transit (up to 20% of the sum insured).
Insurance costs are variable
The price of home and contents insurance varies depending on the property type, location, homeowner demographics, and coverage level.
"The average cost of standard home and contents insurance in Australia and New Zealand is between $130 and $150 per month," Jaime explains. "But saying that, you need to consider any extras costs like temporary accommodation if you need to vacate the premises to rebuild or carry out extensive repairs."
When selecting an insurer, it's important to evaluate the suitability of their policy for your specific needs. Your property and contents value might exceed certain underwriters' criteria, and comparing options is essential with any financial decision.
Most insurance providers offer online calculators for home, building, and contents coverage. These calculators help you estimate initial costs accurately to understand exactly what your policy will cover.
The true value of protection
Jaime suggests you should be as accurate as possible when assessing the value of your property and contents and prioritise comprehensive financial coverage for both full and partial claims. “Always keep receipts as proof of purchase and document value based on categories like clothing, furniture, and appliances.”
Remember to update your policy after making any new purchases, renovations, or valuation changes to ensure that your policy aligns with your property's actual worth. While this might increase your premiums marginally, the security and peace of mind of adequate coverage are invaluable.
Always read the small print
As with any real estate contract, it’s so important that you, the policyholder, read the fine print…carefully. What exactly are you covered for? And, more importantly, when will damaged or lost property be replaced or rebuilt?
If you are unsure about any contractual legalese, seek qualified advice. Contact our qualified team of property managers for help understanding your policy or choosing your next one.
