It is effortless to make many mistakes when purchasing home and contents insurance. If you don't know what you're doing, you could make a costly error. Top six mistakes people make when purchasing home and contents insurance:
1. Not Understanding What a Policy Covers
When you make a claim, the insurance company will only cover the exact loss or damage you have suffered. Terrible things can happen when you don't understand fully what is covered. An example of this is if you're claiming on the damaged property and mistaken about the type of property. For example, you may have a claim on your contents because they were damaged by water, but you only have contents insurance, not building insurance. So if you are going to make a claim, ensure you have the right cover.
2. Buying Insurance from the First Broker
You may want to jump on the first insurance product but do your research. You may find the second or third broker can get you a better deal. Keep an eye out for new and innovative products. They may not be suitable for you, but they might be right for others.
3. Underestimating the Value of Your Home and Contents
When estimating your home and contents, keep in mind that you need to base the figure on your home's market value. The insurance company will determine the value of your home and contents when you make your claim. Also, underestimating the value of your home is a big mistake. If you are caught in a horrible situation, e.g., a flood or fire, you must ensure you are adequately covered. You'll need to insure for the cost of rebuilding your home.
4. Failing to Consider Claim Limits
Consider what your insurance will pay for and what your claim limit is. If you have a building and contents policy but have a claim limit on your contents, you will have to pay the remainder of the loss yourself. The same goes for a liability claim. Consider what your highest possible liability claim could be. If you have a very high liability claim limit and the claim is lower than that, it may be worth reconsidering.
5. Not Considering What Is Covered in a Total Loss
When your home is a total loss, what will you do? Will you relocate? Will you rebuild your home? Knowing whether the policy will cover your costs is essential if you decide to relocate. Will it cover placing you in temporary accommodation, e.g., hotel costs? If you decide to rebuild, you need to know whether your policy will cover you to the same value that you lost.
6. Not Considering Your Own Credit History
When you claim your insurance policy, insurers can view your credit history. If you have a bad credit history, you could have a claim declined. The insurer may investigate your claims history and see if you have made past claims.
Insurance is there to protect you in case of a claim. But it is also there to ensure you don't make any mistakes when it comes to your home and contents insurance. When you take out insurance, you entrust your money to someone, so it is important to ensure you are dealing with a reliable and trusted company.
New Wave Insurance is an Australian insurance specialist, helping clients find the right insurance for their assets, business and indemnity. We've helped thousands of individuals and small businesses find the right insurance whatever their circumstances. If you need home and contents insurance, we’ve got you covered! Book a free 15-minute insurance consultation now!