It's tax time so the likelihood is you're looking at ways to save money in the next financial year. And when people are feeling the pinch they often consider cutting those annoying monthly expenses, such as insurance. Our advice would be don't! Don't get rid of your home and contents insurance because the chances are that as soon as you do, you'll wish you hadn't!
Protecting your pride and joy
Your home is your pride and joy. It's a place to feel safe and secure. So how much is too much to protect that? And more to the point, if something goes wrong, badly wrong, like fire or flood, can you afford to replace everything if you lost it? However, having said that, it is important to shop around and get not only the best value-for-money, but also the best insurance for you.
What's the difference?
Home insurance covers costs associated with loss or damage to the building you own. Contents insurance covers costs associated with loss or damage to your possessions. They are often bundled together as a package but they are separate and you need to work out what cover you need.
Home insurance helps protect you against things that are out of your control, such as damage from natural disasters like storms and bushfires. It covers the cost of replacing or repairing your home, including fixtures. Nowadays you are generally required to have home insurance as part of your home loan arrangements. The question is, could you afford to rebuild your home if it was destroyed? You need to work out if you want 'total replacement' cover or 'sum-insured' cover. Total replacement cover includes all the costs to rebuild your home to the standard it was prior to an event. Sum-insured cover is more common and will cover you up to a set amount.
Don't forget the hidden costs
Remember, if you do have to rebuild your house, you not only have the expected costs of labour and materials but also those hidden extras, like alternative accommodation while your house is rebuilt, removal of debris from the site, architects or other professionals to draw up plans, lodging plans with your local council and so on.
Contents insurance covers the cost of replacing or repairing your unfixed household items - such as furniture, appliances, clothes, jewellery etc - so it's a smart idea to keep receipts for proof of ownership. Start by listing all your belongings and working out how much it would cost to replace them. Taking photos and doing it room by room is sensible because you may be surprised by how much you have.
You choose the level
Once you've done that, you can choose the type of cover you want/need. For example, some policies cover you for defined events, like burglary and fire, while others cover you for any accidental event. Decide whether you want a 'new for old' policy, which will cost more but is often worth it.
And remember, the higher your excess, the cheaper your premium will be.