If you’ve ever had a car crash, a holiday flight cancelled or been robbed, you’ll know how stressful these incidents can be. If you have insurance, the cost of repairs, travel changes or theft can be softened.
Insurance provides the money you need when things go wrong. But with so many companies providing different types of insurance, it’s important to read the fine print, ask lots of questions and find the right policy for your needs.
Insurance is about managing risk. By taking out an insurance policy, you are transferring financial risk to your insurer, for a fee or ‘premium’. Without insurance, you’re taking the risk of meeting those costs yourself.
Here are some tips to help you choose the right insurance cover:
If you need to make a claim on an insurance policy:
Buying a car, or other motor vehicle, is exciting. You may have spent weeks test driving different models to find a vehicle that suits your budget, lifestyle and personality.
You’ll also need to think carefully about vehicle insurance. The type of cover you take out will affect the ongoing cost of owning the vehicle and determine how protected you are if something goes wrong. Always have insurance in place before you take possession of the vehicle.
When choosing an appropriate level of insurance, ask yourself:
Jack came back from deployment and decided to spend his deployment money on a brand new V8 Ute. Jack had $50,000 but bought a $60,000 car, taking out a personal loan for the difference. Jack thought his driving skills were excellent, but being a young driver, comprehensive car insurance was expensive, so he took out third party fire and theft, convinced he was unlikely to have an ‘at fault’ accident.
But Jack did have an accident. Driving back to base one day, he failed to see the car in front stop, and crashed into the back of it at high speed. Fortunately, no one was seriously hurt, but Jack’s car sustained nearly $20,000 worth of damage and was not drivable.
Jack’s insurance covered the damage he caused to the other vehicle but he was left with a wreck he couldn’t drive and a loan he still had to repay.
If Jack had bought a cheaper car and paid for comprehensive insurance, his car would have been repaired or replaced and he wouldn’t have a debt draining his finances.
Car insurance policies are based on either ‘agreed’ or ‘market’ value. An agreed value policy has a set dollar value for your vehicle. Market value policies value your car based on the make, model and condition. The agreed value is usually higher than the market value.
Most insurance policies have an excess, which is the amount you will have to pay if you make a claim, unless another person can be identified as being at fault. You may be able to lower your insurance premium by agreeing to a higher excess, or lower your excess by agreeing to a higher premium.
Make sure you understand the level of cover before signing up. Some typical car insurance exclusions to watch out for include:
Always tell the truth because making a mistake in the information you give your insurer, whether it’s deliberate or not, can affect the premium you pay. If you’re not completely honest with your insurer they could refuse to pay if you try to make a claim.
You must also inform your insurer if your circumstances change. For example, if you:
If you have an accident, contact your insurer straight away. Use your smart phone to take pictures of damage to your vehicle and any other property involved, vehicle licence plates and the driver’s licence of any other drivers involved. This can provide a handy reference if there are any disputes following an accident.
Depending on how serious the accident is, you may need to fill out a police report. If you suspect another driver is under the influence of drugs or alcohol or they are refusing to provide their licence details, ask the police to attend the accident scene. When you’re making the actual claim, put in as much detail as possible.
The cost of insurance is determined by the level of risk your insurer is taking on. As young drivers are involved in more accidents than older drivers, most insurance companies charge a higher premium for drivers under 25.
Young drivers may have to pay an additional ‘age excess’ when making a claim. Always check your policy carefully to see what excesses might apply.
Car dealers will often try to sell you a range of additional products. Here are some tips on what to look out for:
A new car loses considerable value in the first few years. It will start to decrease in value the minute you drive out of the showroom. You can save a lot of money by buying a second hand vehicle, but there are a few extra things to consider.
Go to your state or territory’s roads and traffic authority for helpful information on what you need to do when buying a car privately. It’s also important to call your insurer before you buy to find out everything they need to know about the car.
Your home is a place to feel safe and secure. Choosing the right insurance for your home and your possessions should add to your sense of security and lessen the pain and cost of repairing your home or replacing stolen or damaged goods.
Home insurance covers costs associated with loss or damage to the building you own. Contents insurance covers costs associated with loss or damage to your possessions. For homeowners, these are often bundled together as a ‘home and contents insurance’ package. Keep in mind that they are separate when working out how much cover you need.
Home insurance helps protect you against things that are out of your control, such as damage from natural disasters like storms, floods and bushfires. It covers the cost of replacing or repairing your home, including fixtures such as lights and built in appliances.
If you are part of a strata title, building insurance is usually organised by the body corporate and paid as part of your strata levies.
If you have a home loan, it is likely a condition of the loan that you maintain an appropriate level of building insurance. If you couldn’t afford to rebuild your home if it was destroyed, it’s important to consider your home insurance options.
Typically you have a choice of ‘total replacement’ cover or ‘sum-insured’ cover.
Insurers often have calculators available on their website to help you estimate how much cover to take out. Results from different online calculators can vary considerably, so try a few before making a decision. Keep in mind that the best calculators ask the most questions.
Make sure your home is properly maintained and that you meet the requirements of your insurance policy, otherwise a claim may be denied. Voluntarily installing deadbolts, an alarm or security doors and screens is likely to reduce your premiums.
If you ever need to rebuild your house, you not only have to pay the costs of labour and materials but will also be faced with a range of extra costs including:
Find out if supplementary costs are paid from the sum insured or on top of that amount, as these costs can add up quickly. For example, you lose your home to fire or flood you may be out of your home for more than 12 months after the event.
Insurers cover supplementary costs in three ways:
Contents insurance covers the cost of replacing or repairing your unfixed household items and possessions. This includes items such as furniture, clothes, appliances, tools and jewellery. There are contents insurance policies available that are separate from home insurance to cover people who are renting or in service accommodation.
To work out how much contents insurance you need, start by listing all your belongings and working out how much it would cost to replace them. Go room to room and take photos of unique or expensive items. It’s also a good idea to keep copies of receipts electronically in a safe place outside your home.
The type of cover you choose will affect the premium you pay. Some policies cover you for defined events (e.g. burglary and fire) while others cover you for any accidental event. Others give you limited cover if you take an item (e.g. a laptop) outside your home.
Contents insurance can cover you for the current (second hand) value of your possessions, or on a ‘new for old’ basis. ‘New for old’ policies tend to be more expensive, but it’s important to consider the type of cover you want, not just the cost.
You can save money on contents insurance by choosing a higher excess. Conversely if you want a lower excess, you will pay a higher premium. If something goes wrong, think about how much you are prepared to be out of pocket and work on that as your desired level of excess.
Most home contents polices ask you to declare ‘collections’ separately. A collection can be anything, for example, coins, number plates or artwork. Ask your insurer what can, or should, be identified separately. If you don’t declare your collections, then you may not be able to claim the full amount of your loss if they are stolen or damaged.
Most insurers only provide limited cover for valuables, such as jewellery, unless you list them as separate items on your policy.
If you’re going to away for an extended period and your home will be vacant, be aware that most home and contents insurance policies only cover you for a limited period of time while your home is unoccupied. This is important to remember if you are leaving your home to go on a deployment or other activity.
Policies may automatically lapse if the house is vacant longer than a specified period. Always contact your insurer if you’re going to be away for an extended period of time. If they agree to continue cover, get the agreement in writing, as it may constitute a variation to your contract.
As with any insurance policy, always be completely honest with your insurer and don’t forget to update them if your circumstances change.
Tell your insurer of any damage or loss immediately. This can often be done online or by phone. You may be asked to complete a claim form. Include as many details as possible of the incident, even if they are personally embarrassing.
Keep and provide all documents supporting your claim. Don’t be tempted to add fictitious items to your list of lost or damaged goods. This may be fraud, which is a serious criminal offence.
Cooperate with your insurer and the people they employ to help assess the claim, such as investigators.
Portable electronic devices are easy to damage, misplace or steal. Insurance can offset the cost of repair or replacement if something happens to your device.
Insurance on electronic devices can vary greatly in price and cover, for example, some providers do not cover accidental loss or mechanical damage. Consider what you want to be covered for and how much you are prepared to pay before choosing a policy.
Electronic goods lose value quickly, so insurance is most useful when the device is new. Before you take out insurance compare the cost of premiums per year plus the cost of the excess with the real value of the product.
If you change your mind after you buy the insurance, you can cancel it within the cooling-off period, which is usually 14 days. Check your insurance contract for the exact cooling-off period and conditions.
There are a number of ways you can insure your portable electronic devices, including: cover through your phone plan provider, adding it to your contents policy, getting cover direct from an insurer or you could try on-demand insurance.
If you purchase your device and/or phone plan from a phone provider you may be offered insurance as part of your plan. This may be convenient, especially if you don’t have contents insurance, but it can be a more expensive option. Check what else is available before signing up.
If you already have contents insurance, it may be cost-effective to add your portable electronic devices to your existing policy. Ask your provider for specific mobile phone or device cover because most general ‘personal effects’ or ‘portables’ extras cover may not insure these devices. You will usually have to specify the make and model of your device and check if the cover includes accidental loss.
Adding these devices may increase the cost of your premium and may affect your no-claim discount if you need to make a claim. Check the policy wording carefully.
You can buy a policy direct from an insurance company, but it can be more expensive than adding it to a contents policy. Separate cover may be suitable if you don’t have existing contents insurance.
This type of cover may only be available if your device is brand new. You should also check if you are covered for overseas travel if you are planning on taking it out of the country.
Some providers offer insurance for your portable devices, such as your mobile phone, tablet or laptop only when they are in use. This is called ‘on-demand’ insurance. For example, if you decide to take your laptop to a coffee shop, you can switch ‘on’ the insurance as you leave the house and switch it ‘off’ when you return home.
This type of insurance typically runs through an app on your mobile or tablet. It can save you money by allowing you to decide when you need your portable personal belongings covered. However, there are risks, for example, if your device is stolen or damaged while your insurance is switched ‘off’, you may not be able to claim on your policy, and will probably need to replace the device yourself.
You will usually be billed monthly and refunded for any days that the insurance is not active. It is important to remember that you may only be covered for certain types of damage under on-demand insurance. Read the Product Disclosure Statement (PDS) carefully before you sign up.
Not all policies cover the same things. It is important to find a policy that suits your needs. Check the PDS to see if you are covered for:
Most policies do not cover:
If your portable device has been stolen, you will usually have to notify the police within a set timeframe, for example, within 48 hours and your insurance provider within 14 days. Proof of purchase such as a receipt should be enough to prove your ownership of the device.
You should also:
To keep your electronic devices safe:
Personal insurance includes death, invalidity, income protection and trauma insurance. ADF members have statutory entitlements. Please see the separate personal insurance money guide for more information.
Travel insurance covers things like loss of luggage, medical emergencies, theft and travel delays while you’re travelling, and may also cover you for unexpected events before you leave that may disrupt your travel plans. Most important are medical emergencies, because the cost of medical care in some countries for uninsured people can be very high.
Policies will state dollar limits for each event covered. Travel insurance will cover you for a set period or, if you travel often, you can purchase an annual travel policy.
We recommend purchasing travel insurance as soon as you book your trip so that you’ll be covered for events that may disrupt your travel plans before you have even left home.
Travel insurance usually does not cover:
Read the product disclosure statement (PDS) to find out what’s covered and what’s excluded, especially if you’re planning any unusual activities or you have any pre-existing conditions. Cover can differ between insurers so compare policies for the cover you want at a price you can afford.
When you take out a travel insurance policy you need to let the insurer know of any pre-existing conditions, including any mental health issues. Some policies cover you if you need to cancel or change your travel plans due to a mental health issue that you suffer after buying the policy.
Some airlines offer you insurance when you’re buying tickets online. It may seem convenient, but it’s smart to make sure the cover suits your needs and the cost is competitive, before you agree to buy it. Also watch out for travel websites that automatically select insurance for you, especially if you’re travelling domestically.
Some credit card providers also offer insurance for overseas travel. The cost may be called ‘complimentary’ but is often included in the credit card’s fees (like the application fee or annual fee) or its interest rate.
To be covered, you will usually need to pay for some, or all, of your travel costs with your credit card. Each policy is different, so check with your provider how to activate it.
As with all types of insurance, it’s important to check the terms and conditions to make sure this kind of policy suits your needs. Insurance through your credit card may only cover the cardholder (not your spouse, children, or additional cardholders), and will generally only cover you for the trip you have paid for on your card and only for overseas travel.
Before you leave home, take photos of any expensive items you’re taking with you, record the serial numbers, copy purchase receipts and make sure they’re covered under your policy. Also make a copy of your passport and any other identification documents you are taking with you.
If you need to lodge a claim, be completely honest about events and any mitigating circumstances. There can be serious consequences for making a false claim.
Register your claim or inform your insurer that you intend to make a claim as soon as possible. Some insurers require you to inform them of any incidents within 24 hours.
Your travel insurance policy should include the policy number, details of what is covered and contact details of the insurer for assistance. Always keep a copy of your insurance policy with you when you are travelling.
Your claim is more likely to be accepted if you have the relevant documents:
Don’t forget to keep a copy of your claim that includes all the attachments and proof of submission (like your sent email or registered post details).
When you receive your insurance renewal notice, it’s tempting to just treat it like a bill and pay it, but this could be costing you money. All customers are not equal. Insurers typically offer the best rates to new customers without telling their existing customers that better deals are on offer.
If you want to save money on insurance:
Here’s a few more tips that could save you money when taking out or renewing an insurance policy:
How much money is coming in and going out each week, fortnight or month? By taking charge of your money, you will ease money stress and feel more secure and in control.
Whatever your circumstances, by working out your goals and starting a regular savings plan, you can begin to make your dreams become a reality.
If you or someone you care about is having trouble paying debts, there are services available to help you take control of your finances and get back on track.