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Exploring the home insurance industry

Exploring the home insurance industry

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Date Published : Friday, February 08, 2008

All homeowners in Australia could be severely affected if a home or mortgage insurance company is hit badly by the recent credit crunch, one expert has claimed.

Prushka chief executive Roger Mendelson warned that there would be serious problems and a "huge impact" if an insurer hit a financial crisis.

However, should homeowners be worried by such a bold statement and what should consumers look for when choosing home insurance?

When it comes to the home, there are two main types of insurance: building insurance and home contents insurance. Building insurance covers the bricks and mortar, while home contents insurance does what it says - it covers the contents of the home.

In the case of building insurance, what is included is the cost of restoring the property to its original condition. That means choosing the level of cover is not as simple as nominating the current market value of the home, or its value minus the land value on the latest rates notice.

When determining the right level of insurance, Fairfax's Money Manager suggests checking the cost of rebuilding with a builder or professional valuer and seeking advice from the insurer or insurance broker.

Home contents insurance covers for loss of, or accidental damage to, any belongings, whether it is a purchased or rented property.

The key consideration when deciding if home contents insurance is needed is if the homeowner could readily afford to replace items such as whitegoods, electrical products and the entire wardrobe in the event of a fire, or something such as a stereo or TV in the event of a burglary.

Insurance is something that, like it or not, we all require. If insurance companies are affected at a financial level, we could all see the recriminations.

Compare insurance providers and apply for deals online.ADNFCR-1411-ID-18460934-ADNFCR

 

 

 

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