Saving money on insurance means asking the right questions

By

November 02 2021
Share

There are plenty of must-do’s and missteps that those looking to buy home and contents insurance need to stay on top of.

Loyalty rarely pays when it comes to home and contents insurance, but the same can’t be said of doing your homework.

Speaking to nestegg, Honey Insurance COO Angelo Azar said that Australians held a total of over 25 million household insurance policies in 2020, and that the vast majority of these were renewed without a second thought.

“That’s around 20 million policies renewing and being loyal customers for their insurance provider,” he said.

Fast-forward to 2021, consumers are a little more fickle.

Pointing to recent research published by Roy Morgan, Mr Azar said that more and more consumers are shopping around when it comes to insurance. The number of consumers who renewed their policy without approaching another provider has fallen from 80 per cent to 68 per cent in just 12 months.

“Though still incredibly high, the trend shows that people want to shop smarter and so they should,” Mr Azar said.

For many consumers, he said this process starts by carving out time to properly understand the kind of insurance policy you’re looking for.

The more you know about what you’re looking for, the better.

“If it’s cover for your home, then do you know exactly how much it would cost to rebuild? You may not, and that is perfectly okay,” he said.

Mr Azar noted that many insurance providers are equipped to help fill in the gaps using either third-party data or offering a percentage-based safety net over your insured amount to help with things like demolition, debris removal and planning for your new home.

“Meanwhile, others may not, and you could be left with a huge gap if you do have to call on your insurance provider for help and find out the coverage was inadequate to your needs,” he added.

Next up, you might want to create a list of special items you want covered for higher amounts.

Whether or not a product meets your needs should remain front of mind, even if there’s a particularly tempting discount involved.

Mr Azar said that it’s best to look for discounts that reward you for loyalty and avoid those that are clearly designed to lure you.

“Many insurance providers offer discounts to new customers only to remove them when it’s time to renew,” he said.

Mr Azar said that taking the time to shop around is just as important at renewal time as it is when you first decide to sign up for a policy.

He noted that, on average, Australians renewing a home and contents insurance policy tend to pay 27 per cent more than new customers.

“Look around for what insurance providers will do to reward your behaviour and what will they give you for signing up that they won’t take away later on,” Mr Azar said.

For those who think they’re a good manager of their own risks, he recommended looking for insurance providers who provide smart devices to help with the management of policy risks or discounts based on your loyalty and history of making no claims.

If you’re looking to optimise your insurance costs further, Mr Azar added that it may also be worth looking at the option of increasing or decreasing your excess, as it can have a direct impact on the premium amount.

“A higher excess means a lower premium, and vice versa. However, you should always ensure that the excess amount is one that you’re comfortable with and can pay if you did need to make a claim,” he said.

Last but not least, Mr Azar reminded consumers shopping for the right home and contents insurance that it can be worth reaching out to reputable insurance providers with any specific questions.

“This will ensure that you can sign up to a policy that provides you with what you need so you won’t be unpleasantly surprised if you did need to make a claim at some point in the future,” he said.

While doing the work of finding the best value insurance can be demanding, the benefits can amount to more than just peace of mind.

Some industry reports have suggested that as much as one in five household insurance claims are declined or withdrawn, so making sure you have the right level of coverage could be the thing that saves you from being caught out.

“It can be easy to go for the cheapest option, but it helps to do your homework and find out what it is you’re paying for,” Mr Azar said.

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

About the author

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

sections

most read

Most read

Age Pension increase prompts Australians to review their finances

Latest Podcast

What Adds The Most Value To Properties?

Resources

There is $17.5 billion in lost and unclaimed super across ...

Invest