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Home Owners Under Insured

Home Owners Under Insured

30 September 2015 Symon Badenoch

Most insurance companies agree that the most common reason for home owners being caught short when disaster strikes is not that they have no insurance at all but that what they have is inadequate.

Under insurance is an insidious thing. Once people take out home and contents insurance they tend to think they’re covered. They file their policy away and don’t look at it from one year to the next. It’s a bit like thinking you’re healthy and not bothering to have regular medical check ups.

Contents insurance particularly should be updated once a year, especially if the home owner has made significant purchases.

This way if you fall victim to fire, theft, storm or other disaster you won’t find that you’ve just spent thousands on a new lounge suite or the latest in computer technology only to realise that your contents cover hasn’t kept pace with your rate of acquisition.

You can choose from indemnity type insurance or new for old, but the latter offers greater benefits.

You pay more for new for old but instead of getting the cash value of the insured items less edepreciation you end up getting what it would actually cost to re-stock your cupboards, re-furnish your rooms and so on with brand new items. Insurance companies are able to valueevery household item from the contents of your pantry to your little girl’s Barbie doll collection.

Building insurance also offers a choice of indemnity or new for old. Once again the preference is for the latter because the insurance company will not only replace your home but also cover the cost of demolishing any remains, rubbish removal and so on.

With indemnity insurance if your home burns to the ground the company replaces your home less depreciation only. Obviously the older your decor, the more you stand to gain from paying the higher premium and having the new for old option.

It pays to do your homework and compare the benefits and costs of several insurance companies before committing to any particular company or policy.

But one statistic that nearly all insurance companies agree on is that fifty percent of home owners are under insured.


Lisa Favelle is an Account Manager with Capital Insurance Brokers in Deakin.  She has over 20 years’ experience in the insurance industry.  If you are looking for advice and guidance on other insurance products, Lisa and Capital Insurance Brokers are our trusted and preferred recommendation to our clients and friends.  


For more information follow this link to the Capital Insurance Brokers website