Saturday, 16 August 2014

Insurance considerations

Most of us would be aware of insuring our properties for their full value especially if we live in fire-prone areas when the risk of bushfire is quite high for around six months of the year.

I had recently read the book by Linda Masterson, "Surviving Wildfire", which was full of useful tips about what to do and how to go about it when living in a known wildfire area.

www.Surviving Follow the link to learn more about this book.  In it Linda describes how they had prepared somewhat for the occurrence of a wildfire but not enough for when they were actually hit by a wildfire.  Their house and most of their possessions were destroyed.

An older style house with a traditional garden,
but with some forest trees on a hillside
about 75 m away.
One point that Linda made was to look at the excess that you elect to pay should there be a claim.  Generally the higher the excess the lower the premium.  It is reasoned that small, fiddly claims will not be paid if the excess is, say, $1000 or more.  If one has no excess then there is far more cost for the insurance company because there is still the paperwork in the claim process even if the payout is quite small.

From the client's point of view it is worth insuring for full value in case of serious damage when although the chance of having one's house destroyed completely is not that high, the consequences and the financial loss is huge.  Thus it is best to be insured for the big catastrophe, and not worry about insuring for small claims.

My house and contents insurance comes up for renewal next month.  The premium was just over $1900.  I checked and found I had no excess apart from $300 for tsunamis which considering that I live some 70 km inland from the sea is not all that likely.  I nominated my excess to be $1000.  Thus any small loss or damage I would pay all or most of it myself.

I was amazed to find my premium would drop by over $700.  Thus I am saving nearly 40% on my insurance premium with only a small decrease in my insurance cover and only at the fairly inconsequential part of the insurance cover.

It basically means that I can more easily afford to pay the premium to cover the full value of my house and possessions, rather than be fully covered at the low cost end.

A revised premium quote is being sent to me now and it will be much less to pay.  I wished I had enquired sooner.  And thank you Linda Masterson for that tip.