CHOICE membership

Home and contents insurance review

Yes just looking at some previous comments Brendan. There is never enough information when getting a quote… AAMI’s renewal for the building is $989000. I got quotes based on a new customer - If you use their calculation tool it comes up with $840000. So got a quote for $840,000, then a quote for full replacement and the full replacement amount was actually cheaper than the $840000. Which tells me the $840,000 is above what full replacement would be (and I know this would be the case because if we doubled what it cost us to build our home 5 years ago it still wouldn’t be $840000) It’s frustrating because it scares you into over insuring… RACV’s calculation came in at $665,000.

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Hi @kathy2

I went through the hoops when trying to insure our home, and this is what I found out.

Guides are not accurate. Neither are the templates they provide. They are just memory joggers, guides, and indicators.

If you want to know the true value of your home get a certified valuer (prices vary, so get quotes) to do a valuation of your building (& contents if you are doing that too). The certified valuation is a very good baseline, and accepted by all insurers. The cost is worth it, because then the insurer can not take issue with whether you were correctly insured. Also, then there is no argument about what quality level fittings were

Once you have a certified valuation for your building then on top of that you & and the insurer need to add provision for costs (assuming the home is a write off) for things like:
. access for heavy construction equipment/vehicles to the home may entail removal & clearance of undamaged fencing, structures, etc.
. demolition and clearance of the existing building & building materials
. accessing or re-doing surveys and architectural plans
. cost of building material and building (including all trades) to meet current building codes
. inspection fees etc.
. fit out at current costs
. accommodation costs for you and the family while all this is going on
. a small amount of emergency clothing, bathroom products, etc. to keep you going after home is destroyed
. Council fees
. etc.

So you will see that the insurance value will need to be well above the valuation figure for your home.

Of course don’t forget to insure your home’s contents which are not fixtures and fittings such as curtains & tracks, kitchen appliances. etc. The valuation will also help with whether you had cheap run-of-the-mill kitchen appliances vs expensive ones.

Hope that helps.

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Some advice to help manage your home insurance if you go away on holidays for 60 days or more:

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Could you also review policies for people who rent their whole home out on Airbnb for a few days to a few weeks please? I had policy with NRMA 2 years ago and they said I was covered when I was not there when I purchased the policy…and then when I rang to ask about claiming for new wash basin to replace the one that melted when guest put her heat wand on it & forgot about it, needless to say, they said I was not covered. NRMA have ShareCover now which requires separate policy for each lot of visitors @ approx $5 per day and duplicate some of the Body Corporate public liability. So now I have separate home & contents for me (Coles or Woolworths offer best value) plus the additional cost of ShareCover. Airbnb are not much help as if I just rented room out ( and stayed home), the Coles or Woolworths house and contents policy would cover me

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I’ll be happy to pass on this request @gwenhigg :+1:

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I have always placed all my insurances through an insurance broker. They are acting FOR you, and remunerated by a tradition within the insurance industry out of a small charge paid by the insurance company. They aren’t dependent on the insurers - they act in your interests - and it costs you nothing.
When I was a kid, one of the Australian majors dudded my mother, after Adelaide’s first recorded earthquake. Their pathetic excuse for refusing payment was so utterly ridiculous that it left a very negative impression in my mind, about insurance companies. When I left university and joined the workforce, several well known insurers went bust, leaving policy holders by the thousand with no means of recovering their claims. Over the years I have seen a succession of similar negative performances by supposedly respectable insurers.
So to deal with them, blind, as a consumer, without professional advice, has always struck me as utter nonsense.
The experiences I have had over the past 50 years, dealing with insurers through my broker, has been the exact opposite. I have needed to make several claims during that period, and the insurers’ performance has been quite extraordinarily good. I have needed advice on security, and it was instantly and comprehensively given. I have needed extensions for various reasons, and they were granted on the spot - the additional premium for the last one I requested was a fraction of normal travel insurance charges!
Frankly, I think it’s a mug’s game, dealing direct with insurance companies, without the advice and assistance of a reputable insurance broker.

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I recently noticed an article about people who thought they were covered for “flood” until it came time to claim for an event, they then discovered their policy did not include it! As I am due for my house insurance renewal I decided to check more thoroughly what I am covered for! I found that may policy covers:
Loss or damage caused by:
• storm
• cyclone*
rainwater
run-off (provided run-off is not combined with flood waters).
But NOT:
loss or damage caused by:
• flood
• run-off combined with flood waters
• storm surge
• hydrostatic pressure
• rainwater, run-off, hail, wind or water that enters your buildings through an open door, window or other opening
“These exclusions does not apply if the optional cover for “flood” is selected and shown on the policy schedule”

I am confused about what constitutes a “flood”! It appears there is cover from water damage if it ‘falls from the sky’, ie rain, or if it is “runoff” - but I am not sure what runoff is?**.
I suspect if it rains so hard water runs down my street into my house will be covered as “runoff”? However, if the drain at the end of my street fills and rises up my street into my house, I need the “optional extra” cover?

This appears very pedantic and arbitrary definitions splitting how water damage will be covered! I believe there should be a single broad inclusion for cover from “water damage” no matter what the source of the water! It is time for a NATIONAL standard definition for certain events that ALL Insurances will cover. Arbitrary definitions from Insurers must be eliminated.

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In early 1997, there was a massive downpour in Townsville which flooded much of the city including our Townsville business premises, with the water rising to over 30 cm inside the store.

The grubby insurance company we were with then, CGU, tried to weazel out of the claim by claiming that the flooding resulted due to the creeks and drains overflowing thus causing water to then flood buildings and refused the claim without a hydrologist’s report whilst reputable insurers like Suncorp were processing and paying claims.

the hydrologist’s report determined that the downpour was so great that premises were flooded long before the creeks and drains overflowed, and the pressure caused sewer manholes to pop open and spread sewage throughout the floodwaters so the grubs finally paid up.

So two things to investigate. What the insurer specifies flooding as and how trustworthy the insurer is.

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Australian regulations include a standard definition of flood, which was introduced in June 2012:

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In Qld, a home buyer is required to take out comprehensive insurance cover from the date of signing the purchase contract despite the fact they will not actually own the property until it has settled so the property is temporarily insured by both the buyes and the seller.

I have previously asked real estate agents as to what happens if there is a claim between the contract and settlement dates but they did not know.

After calling our insurer today who said it was outside their area, I called the REIQ which was a total waste of time.

It seems like good business for the insurers to be receiving 2 premiums for the one property as obviously they both would not be paying any claim.

Does anyone actually know what happens if a claim occurs between signing the contract and the settlement?

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I had a chat to our broker and in Queensland, and there a number of point at play…

  1. The standard REIQ contract states “Risk - From 5.00pm on the next business day after the signing of the contract, the property shall be at the risk of the buyer, however, as long as the seller remains in possession of the Property the Seller shall maintain any current insurance policies and will use and maintain the Property with reasonable care”. While the contract states that the seller shall maintain any current insurance policies, there are a significant number of seller who do not have or have under-insured policies. The contract does not force the seller to have insurance to cover any potential property damage.
  2. The Standard contract also states that the Seller is to maintain the property in the same condition as at the day of the contract being signed and the seller is not liable for any damage or losses to the property until settlement. In the case of damage or loss being caused, the buyer can claim reasonable costs from the seller for any damage caused.
  3. The Standard Contract also states that at settlement and where damage has occurred, the Buyer may not delay settlement or withhold monies (namely, the sale continues with the damage).

So what this means is that one could purchase a property from a seller who chooses not to have appropriate insurance, damage occurs to the property and the seller is then required to claim costs against the buyer outside the property sale contract…as the sale contract property continues through to settlement.

If the seller does not have insurance or is under-insured and does not have sufficient funds to pay for the damage on sale of the property, the buyer may be in a situation where the purchased property is damaged and there are insufficient funds from the buyer to make good.

The buyer taking out appropriate insurance covers the buyer in the cause that the seller has no insurance or is under-insured.

It also may be possible…one should seek appropriate legal advice…to have a special condition that the seller has to provide the buyer evidence of appropriate insurance cover and that the seller is to maintain this cover until settlement. This could remove the requirement, subject to agreement, of the seller taking out a policy to cover a property during the contract period. We have used such special clause recently for a property purchase with a long contract period…to remove the financial burden and also protect us from claims from parties using the property (landlord activities).

Note, this is not legal advice but our own recent experience. One should obtain their own legal advice for their own circumstances relating to a property purchase and insurances which should be taken.

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Thanks for your reply but it still does not explain what happens if both the buyer and the seller have the property insured and there is a claim such as from a total loss from fire.

Which insurance company pays?

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The seller insurance as the contract (as outlined above) says the seller is responsible for damage caused until settlement (the standard contact also covers damage caused by the buyer which the buyer is responsible for …for example, it could be as a result of a ladder knocking a whole in a wall during a pre-settlement buyer’s property inspection).

If the seller has no insurance (or under-insurance) or can’t pay to rectify the damage, a claim could then be made through the buyer’s insurance.

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I should have also said that the standard contract also states that ‘the seller will not be liable for any loss of damage to the property unless caused by the seller’s neglect or fault.’

This means that the buyer needs to protect the property in the case of a fire etc.

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Many insurance policies also have personal liability cover in them. These can protect the buyer from having to pay for accidents/injury caused to parties that they have contracted to carry out inspections and other tasks for them or are obliged to have eg valuation inspections for loan purposes. The accident may not have been from any fault by the seller to maintain a safe premises but could have been say a fall from a roof while it was being inspected for cracked tiles on behalf of the buyer or from a pest/termite inspection on behalf of the buyer. It would also cover the buyer for damage their representatives caused to the property while carrying out those duties eg putting a foot through a ceiling. The seller would have no liability to fix such damage caused by the buyer’s people and so the buyer would need to have their own insurance cover, this would cover even the total loss from fire if it was caused by a buyer’s representative.

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An article regarding insurance increasing in the bushfire areas.

I wish our insurance was so cheap.

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