It Pays To Shop Around For Insurance

Sun Herald

Sunday June 25, 2006

Kerrie O'Brien

The rates vary, and it's a competitive industry, Kerrie O'Brien writes.

INSURANCE is not a particularly captivating subject. It's one of those things you think about pretty much only in the event of a break-in or an accident, or some other fairly bleak scenario. But it's a fact of life and one that warrants attention, particularly in light of the statistics: nearly 420,000 burglaries took place last year in Australia - one every 1 1/4 minutes.

And a recent survey by insurer GIO found that as many as seven in 10 Australian home owners are underinsured, by an average 20 per cent, or $65,000 for a house valued at $325,000. That's a better scenario than it has been in the past, but it's still not ideal.

Getting the cheapest premium for your contents insurance is one thing, and there are several ways you can reduce the amount payable. But all insurers say the key is to ensure the policy covers everything you want it to.

It's all very well to save on the premium payment, but if that doesn't cover your most precious assets in the event of a break-in, it's a very short-term win.

HOW A RATE IS DETERMINED

Several factors come into play in determining how much you will pay. Where you live, the simple matter of your postcode, will contribute to the assessed risk and therefore what amount the insurer will charge. There's little you can do about this. Suburbs with high crime rates are considered high-risk areas and premiums will be structured accordingly.

Whether you've made a claim before is another factor, and so is your age. For example, special policies are available to over-55s, as they are more likely to have retired and therefore be at home more often. Special policies have been devised for under-25s. One example is the fire and theft policy offered by AAMI, which aims to encourage those who have recently moved out of home to take out insurance where previously they may not have considered it an option.

Geoff Hughes, public affairs manager at AAMI, says the loss of a laptop, an iPod and a mobile phone can quickly add up to several thousand dollars.

Many companies have calculators on their websites that will help you determine what rate you will be charged. These are quotes only and should be considered as such, but they may prove helpful as a guide.

In terms of building cover, the type of property in question - a house, an apartment or other building - is important, as is its age and condition.

EXTRA COVERAGE FOR SPECIAL ITEMS

The major pitfall when it comes to contents insurance is the coverage of what are considered "special items". Jewellery, art and antiques fall into this category, and should be cited individually when you seek a quote. These sorts of things will often require proof of ownership, whether through valuations or photographs.

The advent of digital cameras makes it quite simple to at least document your pieces; you should save and store images in a different place, as your computer may well go missing in a burglary. Special pieces of jewellery or furniture or technology, including laptops or plasma TVs, should also be given separate mention.

HOW TO REDUCE YOUR PREMIUM

? Secure yourself

Everything from fitting deadlocks up to an alarm system will tend to help you achieve a lower premium. It's all about risk management, which insurers advocate as it lowers their exposure as well as addressing your risk levels.

That said, it's not enough to simply have these in place. Make sure you turn the alarm on, lock windows and activate deadlocks. Likewise, if you upgrade or change your home security, be sure to tell your insurer.

? Multiple policy discounts

Most of the major insurers want to encourage consumers to place all their business with them and provide incentives by offering discounts. If you have your motor vehicle insurance with one provider, they will generally offer you up to 25 per cent off when you look at taking out any other policy, including contents insurance, with them. It's known in the industry as bundling and can mean significant savings.

? Increase your excess

In the event of a claim, the excess is the amount of money you must pay before any insurance coverage kicks in. The amount of the excess differs from company to company, but most insurers offer a discount on your premium that corresponds with the excess figure. AAMI says a premium of $291 with a standard excess of $500 would decrease to $182 if the customer chose a $1000 excess.

? Buy online

As with many services these days, insurance companies keep their costs down when transactions are made through the internet. As a result, you can save on your premiums by purchasing them online. The Allianz website, for example, advertises a potential saving of 5 per cent on house insurance online.

FINALLY

The various insurers have quite clear policies on what they will cover and what they won't. Most have websites featuring hints for consumers, from how to secure your home, through to features such as an inventory on the GIO site which helps you go through your home room by room and document exactly what you want covered.

Know what you want and ensure that's what you are getting. Read through the fine print and make contact with your insurer when you're renovating or if you're heading away on an extended holiday.

Making sure your home and its contents are appropriately insured provides peace of mind. The Insurance Council of Australia says that under the Financial Services Reform Act, insurers must provide a 15-day cooling off period to purchasers. And don't forget to shop around - it's a competitive industry.

© 2006 Sun Herald

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