Are you covered?
By: Smile Elite
September 01, 2022

Why property insurance is important.

“Property owners nationally have chosen to take out insurance to manage their risk from damage caused by Fire, Flood or tenant damage and the like, however due to the dramatic increase in building costs in recent times, under insurance as an issue, has now been further impacted by these cost increases, meaning that while covered for the event there is a shortfall in the claim payment as the property owner has not reviewed their rebuild cost to be reflective of the current replacement value.” Craig Gale Senior Broking Manager – Ausure Insurance Brokers Dubbo (02)6884 2650

Whether you are buying your first home or an investment property, insurance is a critical step to ensure your peace of mind.

From providing a safety net for the unexpected, like illness or accident to replacement, repair or compensation if something dramatic occurs, insurance is certainly an important consideration.

You may think you can’t afford the expense as your budget is tight, but having cover in place can be a saviour if something goes wrong. The level of cover required and the type of policy will determine the costs, and insurance is usually paid as either a monthly or annual premium. It’s important to shop around and compare prices so you get the best value and cover. 

What does the policy cover?

Get professional advice and be aware of the different types of insurance available. Always carefully read any Product Disclosure Statements and Key Fact Sheets to understand what is and isn’t covered.

What insurance should you consider?

Protecting you – Mortgage Protection Insurance

What if you are unable to make your mortgage payments due to death, ill-health, injury or involuntary unemployment? Unlike Lender’s Mortgage Insurance, used to protect your home loan provider, Mortgage Protection Insurance, with different types on offer, may be something to consider. In the circumstances mentioned, if you need to claim, you might receive either a lump sum payment or a monthly payment to an agreed amount of money, or time period, to provide a buffer. 

Protecting your valuable assets – Home or Building Insurance

Your home is your castle and likely your most expensive purchase. Home or building insurance shouldn’t be looked upon as a luxury, it’s a necessity. It’s a wise decision to have Home Insurance (building or property insurance) in place and your mortgage lender may often expect you to take out insurance before settlement, to act as security for your mortgage. We can never predict what disasters such as fires, or storms may occur; likewise, theft or other damage to your home, including permanent fixtures and outbuildings. Having Home or building insurance may help you cover costs should these situations arise. 

With apartments or townhouses within a strata plan, your strata fees may include building insurance cover through the Body Corporate. Before purchasing, ask to see what insurance is in place for the strata scheme.  

Protecting your personal items – Contents Insurance  

Have you ever added up the cost of all the items in your home? It’s an exercise we should all do regularly, at least once a year, as our belongings continually change as we invest/upgrade to the latest and greatest new thing. What would it cost to replace clothes, jewellery, furniture, white goods, kitchenware, artwork, computers, plus, other fittings and furnishings?  You’ll be shocked when you total it up!

Protect your most valuable asset and your belongings by combining your Home and Contents Insurance and bundling your insurance premium, or you can pay it separately, particularly if you don’t own your own home yet.

Agree on a type and a level of cover and you may be asked for an inventory list, particularly if expensive items such as jewellery or artwork are included in the cover. 

Your location, neighbourhood, crime rate and building material may also have an influence on your premiums, so check this out when looking for your policy.

A security system/burglar alarm monitored by a central station or tied directly to a local police station can generally help lower homeowners’ annual premiums, so speak with your insurer if you have one installed, to see if this applies.

Insurance can also provide liability coverage

Check out the policy. As well as protecting your home and contents, policies often protect your liability. You always try to be careful on your property, but others may not be as cautious, and being covered for liability protects you from lawsuits filed by others. If accidents occur, you don’t want to be held legally responsible nor pay the associated costs.

Protecting your investment – Landlord Insurance

You have worked hard to get your investment property, so Landlord Insurance is definitely worth considering, as it can assist in minimizing the financial risks associated with renting out your property. From cover for damage by tenants/guests, to costs associated with loss of rental income or legal fees in certain situations, to protection against a tenant that does not pay rent or loss of rent due to a broken lease; to legal costs incurred with removing a tenant for various reasons, Landlord Insurance can help protect you.

All insurance is definitely not created equal. The least costly will likely give you lesser coverage, so it’s important to do your research and compare at least 3-4 insurance options to find the policy that is right for you and your specific needs.

AcknowledgmentsAussie, Youi, Budget Direct, Investopedia, Ausure