Home insurance premiums in Australia are on the rise, adding pressure to already-tight household budgets.
It’s worth investigating what you can do to get a better deal. A comparison insurance website recently announced that Australians could save $819 on average annually by switching insurers.
They’re right on the money that securing savings depends on where you live. For example, residents of Queensland, Northern Territory and Northern Rivers (NSW) can save the most ($1,000-plus). That’s possibly because they’re the regions with the most significant premium increases due to higher risks from natural disasters such as floods and bushfires, which drive up insurance costs.
So, wherever you live, chances are that as premiums increase, you’re searching for ways to manage insurance costs without compromising coverage. That’s where we, as your broker or adviser, can help. Our professional advice focuses on home building and contents insurance.
Increasing Your Excess
One strategy to lower your monthly premium is to increase your excess, which is the amount you agree to pay when making a claim. Typically, the amounts fall between $500 and $1,500. As a general yardstick, a $500 increase in your excess could reduce your premium by about 10%.
While this can lead to significant savings on premiums, there’s a trade-off. You’ll be less likely to claim for minor damages because you’ll have to cover the higher excess yourself. In addition, you need to ensure that you will have the financial capacity to pay the excess at the time of making the claim. It’s important to weigh up whether the premium savings are worth the extra out-of-pocket expenses in the event of a claim.
By the way, depending on the policy, you can opt for a different excess for building and contents claims
Accurate Valuation of Your Property
Accurately estimating the replacement value of your home and its contents is essential.
Consider that if you over-insure, you may pay for coverage you don’t need. Meanwhile, under-insuring could leave you out of pocket if you ever need to make a claim, which is a greater risk.
Guessing your home’s value is risky. Aim for greater accuracy by using an online home insurance calculator, but remember only a property valuer can give you a precise figure. If you don’t plan to hire a valuer, then ensure you find an online calculator that uses ‘elemental estimating’, advises the official MoneySmart website.
Home Security & Disaster Resistance Enhancements)
Installing security systems can slim down your insurance premiums, so consider:
- Back-to-base alarms
- Surveillance cameras
- Deadlocks, and
- Fire-safety devices.
Many insurers offer discounts for homes equipped with security features that lower the risk of theft or vandalism, for instance. As well, investments in storm shutters, stronger roofing materials, modernising your heating, plumbing and electrical systems can make your home more resistant in the face of risks of fire, water and storm damage.
Be sure to let us know if you’ve upgraded your home security or disaster resistance because that should trigger a review of your policy. We can check for you to see if it qualifies you for a premium discount.
Location Considerations
If a new home is on the cards for you, its location could impact your insurance costs. Premiums tend to be higher in areas at risk of natural disasters or with higher crime rates. Research the potential risks before making a purchase because what might seem a dream location could be a nasty surprise when it comes to paying insurance.
Tailored Insurance Coverage
Tailoring your home insurance policy to suit your current needs can help you save.
Regularly review your coverage to ensure you’re not paying for unnecessary extras.
Think of the optional covers for high-value items, maybe valuables you no longer own or events that may no longer apply to you. As your situation changes, there may be new areas that need coverage (such as renovations), but others don’t (perhaps you’re an empty nester so have fewer household possessions overall).
Bundle Policies
Bundling your building and contents insurance under one policy is another smart way to reduce premiums. Many insurers discount premiums for those who combine policies, making it easier to manage your coverage and potentially saving you money in the process. But, we’ll help you scrutinise the policy fine print so bundling doesn’t lead to you compromising on the coverage you need.
As a homeowner, you can be more in control of your insurance costs. We’re here to help with advice and strategies that help you make the best choice based on your circumstances.
