Monday, 28 January 2008

The Slippery Slide To Under-Insurance

Under-Insurance Is Often Found Out At Claim Time!
Are You On The Slippery Slide To Under-Insurance?

Would You Know Though, If You Thought You Were Correctly Insured In The First Place?

Why Are So Many Australians Under-Insured, And How Did They Become Under-Insured?

This article will supply answers to the above questions, creating an awareness of the under-insurance problem in Australia. Information allowing the realisation and elimination of under-insurance, from home owners insurance policies on home contents in Australia.

Most Australian home owners assume they are correctly insured, and therefore never check to see if they are not. Australians every year find it hard to face up to the fact, their insurance cover was not sufficient. They find out at the time of making a claim to replace home and contents. A lot of Aussie home owners simply believe there is a 'system' in place to stop under-insurance affecting them.

When Aussie Home Inventories asked some of their clients to explain what this 'system' was, it was often reported as, “Well the insurance company has all the information and they will take care of it. After all, that is what we are paying them for!” If there is a 'system' in place, then it must be failing as there are so many Australians still under-insured? The answer simply could be home owners never check their content cover correctly, because they do not realise they have to, and importantly they are not being reminded to.

How often does an insurance company at renewal time, ask for the value of contents purchased throughout the year?

Some of the known facts about under-insurance are:

  • The insurance companies know, there is an under-insurance problem.
  • The home owner is not being made aware, they may have under-insurance.
  • The home owner is not aware of how to eliminate under-insurance.
  • Any loss due to under-insurance will be the responsibility of the home owner.

Most home owners only find out about under-insurance, when filing a claim. To find out at this time can mean:

  • You are going to receive a loss!
  • Your home and lifestyle is not going to recover as quickly as it could have!

Home owners if made aware of under-insurance, would check their contents value and correct the insurance policy. Home owners NEED to be made aware of under-insurance! If insurance companies assumed everyone to be under-insured unless proven, an increase of correct home content cover would result. A small amount of extra marketing from the insurance companies would kick start the process. The proof of content value being supplied by the home owner. More correct policies, less disputes, easier claims. With a system as fine tuned like this, we can only hope for bigger discounts on the premiums!

When anyone makes a claim the last thing they want to here is the word under-insurance! The timing for that under-insurance word is not good, as the customer has just occurred a loss to their family home! “If we could make sure under-insurance would not affect us we would,” is what Aussie Home Inventories hears from prospective clients. The only way to keep on top of the under-insurance problem is to take control of the value of home contents. Every Australian home owner needs to spend time accurately working out what the contents in the home are worth. Time spent now on evaluating content worth, will save time and money over time!

Can you supply a total $ value for new contents purchased last year?

If you cannot answer this question immediately, how long would it take to find the information?

Do you have this $ value recorded from your last insurance cover renewal?

If you are not aware of your home content value, then it is correct to say the insurance company is not either! The insurance company has given you some help though, they have added a 5-10% increase to your contents cover renewal. What kind of household is this 5-10% increase suitable for? Yours or Mr. Average!

Do you remember what the increase in the home contents cover, was for your last paid premium?

Was it stated or was there just a renewal figure?

Were you asked to input your new content purchases for the year?

OK if we assume the insurance company is making an assumption as to what you have spent, then what happens when you have spent more? There is a lot of assuming here by everyone and we know where that leads us! Is this insurance policy not meant to be covering everything owned in the home? These are hard earned belongings and items of sentimental value, souvenirs of your life!

It is time to work out what is covered and what is not! The TIME IS NOW!

Everybody thinks they are covered, but what is far more better is knowing for sure! When you send those dollars out of the door to the insurance company you want assurance you are going to collect TOTAL REPLACEMENT FOR ANY LOSS! After all that is what the insurance cover is for!

Are the insurance companies trying hard enough to find out the basic facts? If only they asked for information at policy renewal time such as:

  • Enter the amount spent on contents last year.
  • List the items and values.

This would make the insurance companies life easier, allowing them to work out if the content cover has been increased enough and looking at the separate items, add extra cover types if needed for special items such as artworks, jewellery, computers etc. Remember it is the home owners responsibility in all cases to have the correct information, to have all the details and supply all the details to the insurance company. An insurance company asking for information at renewal time would help everyone.

An answer to why there are so many under-insured home owners in Australia could simply be, unawareness! There would be few people aware of the fact and ignoring it, as they may as well not pay the insurance cover premium!

To be aware you must be prepared and that means working out values for content cover, by taking stock of home contents. This means all of the contents in the home, garage, basement, storage, loft and sheds need to have a value added! Not an easy task for many homeowners!

If this process sounds to daunting a solution is to use a Home Inventory Service. Professionals that take on the job, remove the worry, the doubt and produce a simple solution. This solution being an accurate, complete Digital Photographic Home Inventory of home contents. Information needed to find out what the home contents are worth!

Learn How To Prepare For Loss?

The next step is to inform the insurance company of the newly revised home contents value. Advising them that a professional home inventory has been carried out recording all the home contents, validating ownership and presence, on a specific date. This home inventory is easily 'on hand' at all times if so required. Ask the insurance company for any discounts due to the home inventory been performed. The correct cover for the contents of the home has now been reached supplying peace of mind for many home owners.

Staying away from the slippery slide into under-insurance means keeping aware of home content additions and adding these to the inventory. Let us assume a home has contents of $30000. A year later the renewal arrives and the policy has increased by 10% of the content value covered, ie by $3000 to $33000.

Checking the list of newly purchased items reports $4850.

Simply going ahead and paying the premium without adjustments equals under-insurance of 4850 - 3000 = $1850!

The correct value of the cover should be amended to $34850.

Not many home owners that Aussie Home Inventories has come across even bother to do this easy step! The information needs to be supplied to the insurance company to stop this slide into under-insurance. Not to forget that some of these items may be breaking the maximum cover per item! Clarify the large expenses with the insurance company, especially those that fall under types such as art, jewellery, computers etc.

Once a home inventory has been completed, it is easy to stay away from under-insurance by keeping the inventory up to date. A Home Inventory Service will be able to do this for by offering an Annual Update Program. Details are forwarded to the Home Inventory Service where they will supply you and the insurance company with the updated inventory.

Aussie Home Inventories surveyed more than 100 people, asking them if they knew what there home content purchases were for the last year. Most replied with the question, “What would they need to know that for! When the same people were then asked if they had contents cover and if they had paid the premium last year the answer was generally YES! The next question asked was, How does your insurance company know what you spent on new purchases, because remember they added the amount to your premium renewal! Next there was silence! The crystal ball at the insurance company has not worked for some time now!

Remember there is only one way to reduce and eliminate under-insurance covering home contents. Follow these easy steps:

  • Workout and record your home contents worth.
  • Keep a record of the years new content purchases.
  • Update you insurance company with these details at renewal time.

By following the above you will eliminate the chance of under-insurance and keep all items insured for their correct amount, under the correct type of cover. You will also be prepared for loss due to disaster, emergency or theft. You chances of recovery will be more speedily, returning your lifestyle to a level at which you are accustomed.

Help Your Family & Friends To Avoid The Slippery Slide To Under-Insurance
By Forwarding Them This Article

How Well Does Your Insurance Company Look After You?

  • When you purchase household goods throughout the year, do you add this added value to your premium?
  • Does your insurance supplier ask you for the details of these household goods at premium renewal time?
  • What is the annual increase in premium made up of?
  • Are you aware of the severity of under-insurance problem in Australia?
  • Has your insurance supplier made you aware that you may be under-insured?
  • If you suspect you may be under-insured how & when are you going to correct your cover?
  • If you suffered a 100% loss and were only 65% covered could you replace the missing 35%?
  • If you have corrected this under-insurance, do you have an up to date inventory?
  • When are you going to start your home inventory?
  • If you have an home inventory is it stored in a fire data safe or outside of your home?

The consequences of discovering under-insurance are still a major problem for many Australian home owners. Make sure you know if your insurance company is really trying HARD to find out if you are under-insured and SAVE you money?

This article has explained how to go about finding under-insurance and how to importantly eliminate it. An increased awareness of the problem will keep home owners prepared for loss due to disaster, emergency and theft.

Aussie Home Inventories supplies a Home Inventory Service offering a range of home inventory options to suit all needs. For the home owner wishing to create a DIY Home Inventory List, they offer a FREE simple or comprehensive option.

For more information on how these services can help you to find out if you are one of the under-insured, contact Aussie Home Inventories today.

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