If you’ve ever had a car crash, a flight cancelled, fallen seriously ill or been robbed, you’ll know how stressful these incidents can be. If you have insurance, the cost of repairs, medical treatments, 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.
In life there is always a risk that things can go wrong. And if they do, you need money to meet your costs and avoid chaos in your finances.
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.
Apply these tips and you’re on your way to making good insurance decisions:
There are some things you need to do when making an insurance claim:
Whenever you provide information to your insurer, you need to remember your duty of disclosure. If the information on your application or claim form is incorrect or misleading, your claim might be denied.
When it comes to renewing your insurance, the easiest thing to do is to continue with your existing insurer. But the smart thing to do is to shop around to save money on premiums and get the best cover. Here are some tips on renewing different types of insurance.
Don’t leave it to the last day to renew your insurance – you’ll be tempted to stick with your current insurer because it’s easier than looking around for a better deal. Follow these tips and start shopping around early.
Before you renew your insurance, check if you need a different level of cover from last year. Make a list of any new goods that need to be insured.
Get at least three quotes and use comparison websites to compare your current premium with that of similar policies. Look for discounts for online renewals or applications and for paying the premium annually instead of monthly.
Check if you need more, less or the same level of cover as last year. Weigh up the difference between having a high premium and low excess versus the opposite. You may be able to save on your premium by increasing your excess. (In relation to an insurance contract, the excess is the amount of an insurance claim that consumers have to pay. The amount is specified in the insurance policy.)
Save on car insurance with the following tips.
Don’t just accept the same level of cover as you had last year. Take the time to work out if your house and your possessions have grown or decreased in value over the last year. If you bought new whitegoods or an entertainment system, you may want extra cover. Or you may need special or expensive items (e.g. an engagement ring) to be listed as part of your cover.
Check if your insurer requires you to have deadlocks on windows and doors. Some insurers require you to do this if you have a large amount of cover.
Check your insurance policy each year when renewal time comes around. It can save you money and heartache, should you ever have to make a claim.
Buying a car is exciting. Many people spend weeks test driving different models to find a vehicle that suits their budget, lifestyle and personality.
You should also think hard about car insurance. The type of cover you take out will affect the overall and ongoing cost of your vehicle. Always shop around for insurance before you go to the car yard.
In addition, there are a number of things young drivers need to consider.
Compulsory third party (CTP) insurance is the most important type of car insurance. It covers death and injury to people if you are involved in an accident. Each state and territory has different rules relating to this type of cover.
Additional types of car insurance include:
What type of car insurance do you need? Some third party property policies include an ‘uninsured motorist extension’ that covers you if your car is damaged in accident and you’re not at fault.
By law you are required to have CTP insurance. This is sometimes known as a green slip.
On top of CTP cover, decide what level of additional cover you need. Ask yourself:
For most people, having (at least) third party property insurance is the way to go because it means you won’t have to pay a hefty sum for someone else’s damaged vehicle.
Richie decided not to get any extra car insurance on top of his CTP because his car was very old. A few months later, he hit a brand new sports car, which needed $20,000 worth of repairs.
Because he was not insured for damage to other cars, Richie had to take out an expensive personal loan and work extra hours to pay off the debt over 5 years.
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.
When comparing the cost of different car insurance policies, weigh up the difference between having a high premium and low excess versus the opposite. You may be able to save on your premium by increasing your excess (in relation to an insurance contract, the excess is the amount of an insurance claim that consumers have to pay. The amount is specified in the insurance policy).
Tips for saving on car insurance premiums:
Make sure you understand the level of cover before signing up. Below are some typical car insurance exclusions to watch out for:
Always ‘tell it like it is’ because making a mistake in the information you give your insurer, whether it’s deliberate or not, can affect the premium you pay. Provide truthful information at all times. If you don’t the insurer might refuse to pay when you try to make a claim.
Also inform your insurer if your circumstances change. For example, if you:
Jimmy bought a new car and took out comprehensive insurance. He decided to add a spoiler and lower the car a few inches to give it a more distinctive look. But when the car was damaged, his claim was rejected because he had not informed his insurer of the changes.
Check your policy to see what your excess will be for likely incidents.
If you have an accident, contact your insurer straight away. Depending on how serious the accident is, you may need to fill out a police report. Get details from any other parties involved. When you’re making the actual claim, put in as much detail as possible.
Selecting the right insurance for your car, motorbike, truck or van is very important and could save you lots of money if something goes wrong. At the very least you should always consider getting third party property cover so you don’t end up with a big debt if you’re in an accident.
Claims for some incidents may result in you paying multiple excesses.
Just got your Ls or your Ps? About to buy your first car?
There are lots of things you need to do before you hit the streets. You need to set up a budget so you know exactly what it costs to run a car. You need to find a car that matches your personality and your needs. And you need to think hard about insurance.
The cost of insurance is determined by the level of risk your insurer is taking on. As more young drivers are involved in accidents than older drivers, most insurance companies charge a higher premium for drivers under 25.
Young drivers may also have to pay an additional ‘age excess’ when making a claim. Always check your policy carefully to see what excesses might apply.
If your parents are letting you use the family car, they will have to pay extra to insure you and the car. It’s important that they inform their insurer when you start driving. Otherwise, the insurer might not pay for damage if you have an accident.
Buying a car, getting a loan and paying for insurance are three separate things. Always shop around. You might be better off getting each of these services from three different places.
The table below shows the coverage offered by different types of insurance.
When working out how much cover you need, as a minimum, you should get third party property insurance so you’re covered if you wreck someone else’s car.
Here are some things to watch out for if your car dealer tries to sell you:
Dave decided not to get any extra car insurance on top of his CTP, but he did get consumer credit insurance. Weeks later, he backed into his neighbour’s garage door and caused $3,000 worth of damage.
Dave was shocked when he realised his consumer credit insurance didn’t cover the costs of repairing the garage or his car. It only covered him if he couldn’t meet some of his loan repayments due to a serious accident, illness, unemployment or death.
If you buy a car privately, including through an internet site, you still need to shop around for insurance and be sure that you’re covered before you drive away with your new car. In fact, when you’re buying privately it pays to be extra vigilant checking the details and doing all the appropriate paperwork and back checks.
Go to your state or territory roads and traffic authority for helpful information on what you need to do when buying a car privately. It’s also very important to call your insurer before you buy to find out everything they need to know about the car.
Always add on the cost of insurance when working out how much to borrow. Consider the cost of:
If you’re driving a used or old car you might save a lot of money and hassle by becoming a member of a roadside assistance program.
And always factor in the ongoing running costs of your vehicle including petrol, car parking, car washing and anything else you want to spend.
When you’re buying a car privately you should always do a REVS check. REVS stands for Register of Encumbered Vehicles. REVS is a free service run by State and Territory governments which can tell you if the car you’re thinking of buying is carrying a debt, and could be repossessed.
Mandy bought her first car and wanted to insure it. Her mum suggested she buy the insurance from the same company she was with. Mandy rang the company and got a quote.
Instead of just accepting the quote, Mandy asked three other insurance companies to compare what cover she could get and how much it would cost. It turned out her mum’s insurer charged high rates for young drivers. By shopping around, Mandy was able to get the level of cover she wanted at a cheaper price.
Your home is your pride and joy. It’s a place to feel safe and secure. Choosing the right insurance for your home and your possessions will give you an added sense of security and lessen the pain and cost of repairing your home and 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. These are often bundled together as a ‘home and contents insurance’ package. Keep in mind that they are separate and work out what cover you need.
Home insurance helps protect you against things that are out of your control, such as damage from natural disasters like storms and bushfires.
Home insurance covers the cost of replacing or repairing your home, including fixtures (i.e. the building and fittings such as lights).
Almost all home owners need home insurance and are required to have it as part of their home loan arrangements. Could you afford to rebuild your home if it was destroyed?
You need to work out if you want ‘total replacement’ cover or ‘sum-insured’ cover. Total replacement cover includes all the costs to rebuild your home to the standard it was prior to an event. Sum-insured cover is more common and will cover you up to a set amount. There are a number of variations to these two basic models, so read the fine print and ask as many questions as possible when comparing insurers.
Most insurers offer home and contents insurance as a package. Always shop around for the right level of cover at the best price. It’s as simple as phoning three insurance companies or visiting three websites.
When you visit insurance companies’ websites, use their estimators or calculators to see how much cover you need. But be careful as these online calculators can vary from company to company, so try at least three before making a decision. Keep in mind that the best calculators ask the most questions.
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 or ‘supplementary’ costs including paying for:
Depending on the circumstances, these costs can really add up quickly. For example, some people who lost their homes in the Canberra bushfires of 2003 were out of their homes for more than 12 months waiting for their houses to be rebuilt.
Find out if supplementary costs are paid from the sum insured or from on top of that amount.
Insurers cover supplementary costs in three ways:
Contents insurance covers the cost of replacing or repairing your unfixed household items and possessions. This includes furniture, clothes, appliances and jewellery.
When working out how much home and contents insurance you need, start by listing all your belongings and working out how much it would cost to replace them. Taking photos and doing it room by room is sensible because you may be surprised by how much you have.
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 only limited cover if you take an item (e.g. a laptop) outside your home.
There are two main types of contents insurance:
‘New for old’ policies tend to be more expensive. Work out what type of cover you want and weigh up the costs.
You can save money on contents insurance by choosing a higher excess. For example, if you could pay the first $1,000 of any loss, the insurance premium will be cheaper.
Alina and Daniel moved into a small apartment near the city. They decided to get contents insurance even though their building had a security system.
Two months later their apartment was burgled. They lost their laptop and some DVDs. Alina was very upset but glad they took the time to get the right cover. Her laptop was replaced and she was compensated for the stolen DVDs.
Most home contents polices ask you to declare ‘collections’ separately. A collection can be DVDs, stamps or anything else – ask your insurer what can be identified.
If you don’t declare your collections, then you may not be able to claim the full amount of your loss if your CDs or DVDs get stolen or damaged.
Most insurers provide limited cover for valuables such as jewellery. You may need extra cover to adequately insure all your valuables.
If you’re going to away for an extended period and your home will be vacant then please be aware that most home and contents insurance policies only cover you for a limited period of time while you’re home isn’t occupied.
Some policies automatically lapse if the house is vacant for a specified period. Others demand that if you know you’re home will be vacant for more than a particular number of days then you need to contact the insurer.
You must ‘tell it like it is’:
You should also ensure your home is properly maintained. For example, some insurers insist you have deadlocks on your doors and windows. Or you could install an alarm. Failing to meet the requirements of your insurance policy may mean any claim you make gets denied.
Don’t be tempted to add fictitious items to your list of lost or damaged goods. If you get caught, there could be serious legal implications.
Many insurers won’t cover events which occur if your home is unoccupied for more than 60 days. Check what your policy says.
Choosing the right home and contents insurance can give you peace of mind. By researching your options thoroughly, you can protect your most precious asset: your home.
Having your home damaged or destroyed in a natural disaster is devastating. While these events are usually impossible to predict, one thing you can control is your insurance.
If you live in an area prone to natural disasters, home and contents insurance is essential. In the event of a natural disaster, the insurer will help pay for repairs and other expenses, making it easier for you to get back on your feet.
If your home has been damaged in a bushfire, storm, flood or cyclone, here are some things you should do:
If you’re having problems with your insurance and you need guidance in how to make a complaint to your financial institution, you may contact the ADF Financial Services Consumer Centre.
Don’t worry if your insurance documents have been lost or damaged as insurance companies keep records electronically. You can ask your insurer to send you a copy of your policy.
Your insurance policy will state what disasters you are covered for. While insurers generally cover storm damage, the level of cover varies. Unfortunately, some people find that their claims will not be paid and end up paying hefty repair costs themselves. Flood cover is not offered in many home and contents insurance policies.
If you have home and contents insurance, check:
If you’re not happy with your current level of cover, talk to your insurer and see what they can offer. You can also shop around for a policy that’s better suited to your needs.
There have been many serious floods, fires, cyclones and storms in Australia over the last few years.
Many people do not have enough insurance cover on their home. This can be extremely costly and stressful, if you lose your home.
Wherever you live, your home insurance needs to be enough to cover the cost of rebuilding your home.
It is estimated that 13% of homes that required reconstruction or significant repair from the 2009 Victorian bushfires were NOT insured. See the Royal Commission’s report on the Victorian bushfires and ASIC’s reports on getting home insurance right – a report into underinsurance and making home insurance better.
One person who lost their home in the Canberra bushfires of 2003, who thought they had enough insurance told us: ‘We now have a mortgage of $140,000 when we owned our home outright before’.
Increasing your insurance cover may not cost very much, and if you shop around you may even be able to get more cover for a lower price.
Make sure you have the right home insurance cover by:
Australia is a great place to live but it is also a harsh environment. Taking some time to do your insurance homework will help ensure maximum protection for your home.
Underinsurance is when you don’t have enough insurance to cover all the costs of rebuilding your home. You are considered to be underinsured if your insurance covers less than 90% of the rebuilding costs.
Increasing your insurance cover may not cost very much, and you may even be able to get more cover for the same or a lower price.
You could be underinsured because:
You can also be underinsured for your home contents if you don’t have enough home contents insurance to replace your things, especially your jewellery and collections.
Check that you have enough cover each year when you’re renewing your insurance or changing insurers.
Most people only read their policy when they need to make a claim. Unfortunately, by this time it’s often too late. Check your policy now to see how much your insurer will pay and under what circumstances. Also check when your insurer will reject a claim.
When working out how much cover you need, consider the possibility that your whole house could be destroyed, for example, by a bushfire or other natural disaster. Does your policy provide enough insurance to cover the cost of rebuilding your house and any extra costs you might incur?
Also see storms and fires for information on insurance for natural disasters.
Policies with the lowest risk of underinsurance are ‘total replacement’ policies, where the insurer agrees to pay unlimited replacement costs.
‘Sum-insured’ policies have a slightly higher risk of underinsurance. You will be underinsured if there is a gap between the estimated rebuilding costs and the actual rebuilding costs.
Some sum-insured policies also offer an ‘extended cover’ policy that provides up to 30% on top of the sum insured in the event of a total loss – this is a good way to reduce the risk of underinsurance.
Whatever type of home insurance policy you have, there is always a risk of underinsurance. The golden rule is to get enough cover for the worst case scenario.
If you have a ‘sum insured’ home insurance policy, be extra careful when estimating rebuilding costs.
When working out how much home building insurance you need, the most important factor is estimating what it would cost to rebuild your home. This is a very complex task. You may need some help.
Many insurers have online calculators on their websites to help you work out the ‘sum insured’ (the amount of cover you need in dollars) for your home.
These calculators can be useful for working out how much cover you need, but not all calculators are the same. They use two different methods to estimate rebuilding costs:
Cost per square metre calculators will ask you less than 10 questions and may not take into account all the features of your home. They are likely to give you an average figure that could be too high or too low.
The more basic web calculators are limited because they apply an average figure to each house. They don’t take into account features that can increase rebuilding costs, like whether your home is built on a slope, has higher quality finishings or is more than 40 years old.
The results can vary greatly from calculator to calculator. So it pays to be aware that there are differences between calculators, and that some are more reliable than others.
The best web calculators are the ones that ask lots of questions about your home. You should only use a calculator that asks you for lots of details, such as:
The best home insurance calculators take up to 15 minutes to complete because you’re getting a more personalised estimate of what it will cost to rebuild your home if it is destroyed.
Use at least three calculators and compare the results. Go online (look at blogs and forums) to find out other people’s experiences of home insurance estimates and see what they think about various calculators.
When it is time to renew your home insurance, shop around and you might be able to get more cover for the same price.
Also consider any differences between the policies offered by the insurers you are comparing. You will generally be better off if you have a significantly higher level of cover.
Shop around and get the most for your money. For example, you might opt for a higher excess so you can reduce your premium.
Always check any differences in the cover offered by different insurers, as well as the price.
Rebuilding a home after it has been damaged or destroyed can be a logistical and financial nightmare. There are many additional (or ‘supplementary’) costs you may not have thought of that need to be paid for, as part of the rebuild.
Learn more about these costs and how to work out if they are covered by your insurance policy.
Supplementary costs are extra expenses you have to pay if you need to rebuild your home. They are things you may not always immediately think of when working out what kind of home building insurance you need, including:
Get your policy document and look in the section that describes when the insurer will pay claims for damages.
After you’ve found the right section of the policy, see how your insurer covers each cost. Insurers have three main ways to describe what they will pay.
Information about supplementary costs is often dealt with in a section called ‘Additional features’, ‘Additional benefits’ or ‘Other costs we will pay’.
The following table shows the three ways, using architects’ fees as an example:
Are supplementary costs included in the sum insured?When checking what supplementary costs are covered in your policy, ask:
Work out what supplementary costs you would have to pay if you needed to rebuild your home. Then see if you have enough home building insurance to cover those costs.
Nothing ruins a holiday or business trip faster than lost luggage or an unexpected accident. Having travel insurance won’t prevent things from going wrong, but it can make things much easier if you get into trouble.
Travel insurance policies typically cover the following:
The most important aspect of travel insurance relates to the need for urgent medical treatment or if your flights get cancelled. These things can cost you megabucks if you’re not covered.
Travel insurance requires you to pay an upfront premium to cover you for a set period of time. You can also purchase travel insurance for the whole year if you travel a lot.
On top of the premium, you may have to pay an excess when you make a claim. Make sure you know what the excess is before deciding which travel insurance provider to go with.
When choosing a travel insurance policy find out:
Some airlines let you choose travel insurance when you’re buying tickets online. It may seem convenient, but make sure the cover is what you want. Shopping around for the best cover is always wise. And watch out for websites that automatically select travel insurance for you, especially if you’re travelling domestically.
You must ‘tell it like it is’:
If you don’t ‘tell it like it is’, you may not be covered when you make a claim. Be truthful about your travel plans and medical history when applying for travel insurance.
Travel insurance usually does not cover:
Some insurance policies exclude losses incurred due to the financial failure of an airline, hotel or other travel operator.
If you’re about to travel overseas and want insurance, checking the exclusions that apply to your policy is worthwhile. You can read the product disclosure statement or simply ring and ask what’s covered and what’s excluded, especially if you’re planning any unusual activities. If you’re not happy with the answers, shop around.
Rhys was waiting at a bus terminal in Los Angeles when his bag was stolen. He lost all his clothes and other personal items. When he made his insurance claim he told them that his bag was stolen from a bench while he was in a nearby newsagent. They rejected his claim because it was classified as being ‘unattended’.
Making a claim on your travel insurance is much like any other insurance claim. For example, you may need a police report for a claim on a stolen camera.
It always pays to register your claim or at the very least inform your insurer that a claim is coming as soon as possible. Some insurers require you to inform them of any claims within 24 hours.
Carry the travel insurance details for the country you are travelling to.
Sarah went skiing in New Zealand and decided to get travel insurance in case she got injured. Unfortunately she crashed into another skier and broke her leg!
But when her insurer discovered she’d had a knee reconstruction 2 years earlier, they denied her claim because she hadn’t informed them of her pre-existing condition. Always tell your insurer the whole truth.
Travelling the world can be a great experience. Spending a little extra time to select the right travel insurance can make it easier and quicker to sort out problems if something goes wrong. Then you can get back to enjoying your trip!
If you get sick or need ongoing medical treatment, the last thing you should worry about is how to pay the bills. Private health insurance can help reduce the cost of hospital fees and other expenses, so you can focus all your energies on getting better.
Private health insurance can help you pay hospital and medical costs not covered by Medicare. If you don’t have private health insurance, it can cost you a lot of money if something goes wrong and you have to undergo prolonged medical treatment.
Look for a policy that includes the health and medical services that you want. Most insurers provide different policies for people at different stages of life. The premium and excess will also vary depending on your age and health.
To find out what different insurers offer, read the Standard Information Statement. You can compare all registered private health insurers (or health funds) at http://www.privatehealth.gov.au/.
As with all insurance, always look out for the exclusions when comparing health funds. Private health cover often excludes claims that relate to pre-existing conditions and specific things like plastic surgery. There will also be restrictions about how much you can claim and waiting periods may apply for specific types of claims including obstetrics and major dental work.
Generally, all Australians pay the Medicare levy of 1.5% of their income as part of their tax. If you earn over a certain amount and don’t have private health insurance, you may pay an additional Medicare levy surcharge of 1%. That’s 2.5% of your total income.
If you’re on a high income it may be cheaper to buy the insurance than pay the surcharge. For the latest figures and rules around the Medicare levy surcharge and other tax issues relating to health funds, see the Australian Taxation Office’s information on the Medicare levy.
You must be completely honest if you make a claim or if your circumstances change. Failing to ‘tell it like it is’ means you may not be covered as your insurer may not honour any claims if they find out you misled them.
Most health funds require you to make a claim within 2 years of an accident or illness. Be sure to check what time limits apply to your level of cover and for different types of claims.
Andrew was told by his dentist that he needed his wisdom teeth removed. He rang his health fund and was pleasantly surprised when they told him most of the cost was covered by his insurance. That meant he could get the work done straight away and not put it on his credit card.
Like all types of insurance, deciding whether to buy private health insurance depends on your personal circumstances. It’s worthwhile taking some time to investigate the potential benefits for you.
Portable electronic devices are highly valuable but also easy to damage, misplace or steal. Insurance can be a good way to offset the cost of repair or replacement.
Before you take out insurance read the fine print, as some providers do not cover accidental loss or mechanical damage.
It pays to shop around as insurance on electronic devices can vary greatly in price and cover.
Because electronic goods lose value quickly, insurance is of most use to you when the product 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.
Once you have taken out the insurance, if you change your mind you can cancel it within the cooling-off period, usually 14 days. Check your insurance contract for the exact cooling-off period and conditions.
Check if your policy covers accidental loss. Some policies don’t cover this.
There are two ways you can insure your portable electronic devices: you can add to your contents insurance or get separate portable cover.
If you already have contents insurance for your home, adding your portable electronic devices to your existing insurance can be a cost-effective option. Ask your provider what cover they provide for an extra portable item.
This will cost extra in your premium but if you need to make a claim, it usually won’t affect your no-claim discount on your general contents insurance.
These insurance policies are also more likely to cover accidental loss of your device.
You can also buy insurance specifically for portable devices from companies that specialise in this type of insurance. Separate portable insurance can work well for people who have no existing contents insurance. You’ll pay your premium yearly or monthly, depending on your provider.
Be aware that some insurers won’t allow you to start a policy if your electronic device is not brand new. You should also check if you are covered for overseas travel.
Not all policies cover the same things. It is important that you find a policy that covers your needs. Check the Product Disclosure Statement to see if these things are covered:
Most policies do not cover the following:
It is important to know that most policies don’t give you a new phone if you have lost one that is a few years old. Most only cover you for the current value of your phone.
If your portable device has been stolen you will usually have to notify the police 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:
Remember that if someone steals your phone, laptop or tablet, they can get more information from it than they can from your wallet.
To keep your electronic devices safe:
Portable insurance can be a great way of saving you money when your personal devices go missing, but read all the terms and conditions before you sign up. Then you’ll know exactly what you are getting for your money.
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.
Once you have been able to generate some savings, the next step is to get your money to work for you. This includes having clear goals, using money wisely, and managing your loans, insurance and retirement savings.
Whatever your circumstances, by working out your goals and starting a regular savings plan, you can begin to make your dreams become a reality.