No More Tears
The Age
Monday December 4, 1995
After-the-event is too late when it comes to insurance. JAN WILLIAMSON examines the top 10 causes of insurance angst.
DON'T be caught with inadequate insurance. It's easy to miss items and situations you should be insured for, especially if you're working to a budget. But if you are not completely covered, you could be in for a nasty surprise when you make your claim.
Jeff Graham, from Commercial Union, says people tackle insurance the wrong way round. Instead of working out what needs to be insured, they set themselves a limit and buy what they can for that amount.
Full cover may only cost a small amount extra, according to Jeff. And what many people fail to realise is that by simply informing their insurance companies of changes, such as leaving the house unoccupied for long periods or storing goods elsewhere, their company will make sure that they remain covered, often for no extra fee.
Here are the most common causes of nasty insurance surprises.
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1. Underinsurance.
Averaging clauses, where insurance companies only gave you a percentage of your claim if they thought you were underinsured, have largely disappeared from the market. However, you would be wise to remember that insurance companies are not benevolent funds. If you lose everything in a fire, the most you will get from your insurance company is the sum you were insured for, even if this is less than what your goods are really worth. Don't just count in large items when totalling the value of your possessions CDs and books, even linen will be expensive to replace. Make certain you are insured for your TOTAL LOSS, including demolition costs, legal fees and surveyors' charges, not just replacement cost of house and goods.
Remember Christmas presents. Opportunistic burglars could be looking for easy pickings around unoccupied houses this Christmas. If you're lucky enough to score a diamond tiara or other valuables from Santa, add them to your policy as soon as possible.
2. Working From Home.
Domestic policies will not give you all the cover you need for a business operated from home. Some companies will give you an allowance for loss of computer equipment, as this is often for home use as well, but it may not be enough to completely cover replacement. You will need a separate insurance policy to fully cover equipment, stock and losses caused by interruption to business.
It is also vital to insure for damages arising from business operations. Domestic policies protect you and your family from legal liability for injury, death or illness to other people. However, they exclude claims arising from conduct of your business, such as a client falling down the stairs.
You will need separate cover for this, too.
4. House Unoccupied and Holiday Homes.
Your insurance company should be notified if your home is unoccupied for more than the time specified in your policy, usually 60 days. If no notification is received, your theft, fire and perhaps even storm insurance will lapse. Other conditions may also apply. Sun Alliance, for example, also requires notification if your home is left unfurnished for longer than 14 days.
5. Holiday Homes.
Some people fail to adequately insure holiday homes. But although insurance companies don't always like to cover these because of increased risk of fire and vandalism, it can be done. However, you may have to accept high premiums or high excess on claims.
Special conditions, such as management by an agent or provision of firefighting equipment, may also apply.
Some companies allow you to maintain existing cover by having a friend stay over for a couple of nights while you are away.
But it is probably simpler and safer to extend your cover.
The RACV charges an extra $25 for each month over 60 days that you are away.
5. High-Risk Items and Valuables.
Policies usually require you to specify high-risk items in your home, such as computers, stereos, televisions and portable musical instruments. Make sure you keep this list up to date to maintain full cover. Otherwise you may only receive a percentage of the value when you make a claim.
Valuables cover is sold as an extra, to insure goods taken outside the house. Again, check what items need to be specified to be fully insured, as there may be a price limit set for unspecified items. Cameras and jewellery are obvious items, but don't forget laptops, mobile phones and portable CD players ,too.
6. Replacement Cost.
Check your policy. Some offer new for old replacement on all goods, no matter how old they are. Others set an age limit or exclude selected items, like carpets and linen.
7. Visible Signs of Entry.
Some policies will only cover stolen goods if there are visible signs of forced entry. If the thief picked up your spare key or slid open an unlocked window to get in, you may not be covered.
8. Goods Stored Away From Home.
If goods are stored away from your house, let your insurance company know. You may be asked to provide extra security where goods are stored, or take out additional cover before these goods are insured.
9. Storm Damage.
Some policies state that a storm must have created an opening, such as tiles blown off, before you can claim for damage.
If you have had internal leaks from gutters overflowing, this may not be covered.
10. Unrelated Occupants.
A major trap for friends sharing a house is that some companies will not insure goods where there are more than two unrelated occupants. People in this situation should seek advice from an agent or broker, who will find a company with an appropriate policy.
It is a good idea to take photos, or run a video camera around the house to give you an independent record of your belongings.
These will help when making a claim. Keep a second set away from home, in case of fire.
TELSTRA has just increased the cost of their customer protection plan by a whopping 58 per cent. The cost of ServiceNet Wiring Maintenance, was 60 cents a month. It has now gone up to 95 cents, so it still might be the cheapest cover slog in town.
This is to cover service and repairs to wiring past the first socket.
Telstra used to maintain all wiring and handsets, but when the industry was deregulated, responsibility for sockets and cabling past the first socket moved into consumers' hands.
If internal cables are chewed through by termites or the family dog, then you foot the bill for repairs. These could be expensive. Telstra's rates are $45 for the service call, $15 per quarter hour, plus cost of materials. ServiceNet Wiring Maintenance covers service and maintenance of up to three lines per customer per premises. For further information, call 1800 058 058.
© 1995 The Age
