How house insurers and the building regulators can cause you financial ruin

[phb]

@pattymac

Let’s say you have home insurance for $1,000,000 for a house with a granny flat, and the flat and enough of the house are destroyed to equal more than 50% of the property…Do they pay up to a million dollars of cost to replace the flat and half-house?

This would possibly trigger an investigation into whether the house was underinsured. This poses its own risks which are covered in this other post…

House and contents insurance detail errors caused by the insurer

There is a risk that if one knowingly underinsures to save premium costs, insurance companies can prorata any payouts accordingly. For example, if one underinsures their $100k contents for $50k to save money, when a claim is made the insurer may choose to pay out only 50% the value of the claimed goods. Many insurers have information on intentional underinsurance implications in their PDS. This website explains the risks… https://www.austbrokers.com.au/news-centre/beware-of-underinsurance-ri…

Hypotheticals are difficult to say what the outcome is as it will be dependent on the type of cover, what caused the damage, what the specific insurance policy says etc.