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Date Published : Wednesday, April 09, 2008
While home insurance can save homeowners thousands of dollars, it can prove costly if the policy is incorrect or if consumers do not understand its limitations, an industry expert recently said.
Not having insurance cover in case of flood, or in case of a DIY accident, can have major consequences for the property, its owners and their bank balances.
ING Australia senior product manager for general insurance Ganesh Bajpe said that there are two major components to home insurance - building, which covers the property's permanent fixtures and contents.
"Insurance is something people should take cover for so they can avoid being out of pocket in case of loss or damage and they're trying to repair or rebuild," he told the Adelaide Advertiser.
In determining the right level of cover, check the cost of rebuilding with a builder or professional valuer and seek advice from your insurer or insurance broker.
Underestimate the cost of rebuilding your home and it could come back to haunt you. If your property is insured for $150,000 but costs $200,000 to rebuild, the insurer will only pay out the $150,000.
Often, mortgage lenders will insist you have building insurance and home insurance, to protect their interest in the property as security against the loan.
When choosing a policy, Money Manager suggests consumer should balance the cost of the premium against what is covered - one policy might seem cheaper but it might have quite strict rules, making it hard to claim for things such as stormwater damage, or it might have a long list of exclusions.
Compare insurance providers and apply for the best deals online.
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