How to tailor your home insurance policy

But are you paying for some things you don’t need as well? Tailoring your policy to suit your home and its contents is a smart idea to save money and ensure your home is safe.

Extra costs and small print

Home insurance can be a large cost for homeowners and price hikes seem to occur even when loyalty discounts on customer’s premiums are added. These offers are often in bold type on the front pages of insurance certificates, claiming to reduce premiums. What is not clear is by how much these discounts compensate for the annual price hikes. Don’t be sucked in ­­– do the math and work out if you’re better off with a different insurance company without the loyalty discounts.

It’s not only pricing that can be confusing in the small print. For example, the small print on the contentious issue of flood/storm damage often struggles to accurately define the difference between a flood and a storm. Many insurers have only recently made flood cover mandatory in their policies for many areas but often the small print (or even the large print) will fail to itemise this cost. If your home is in an area that has a history of floods be sure to ask the right questions when insuring your home and get the cover you need in case of disaster.

Ways to tailor your policy

1. Read the fine details: Reading the small print of your policies allows you to understand precisely what you are covered for and what cover is lacking.
2. Add or eliminate assets: Adding and eliminating assets from your policy is a good idea for some home owners. You could be paying for items that you really don’t need to worry about. Conversely, some high value items may have not been added to your policy, like new jewellery or electronics. Doing an audit of items that are covered on a yearly basis will keep your policy up to date.
3. Raise your policy excess: Increasing your excess on individual policies is a simple yet effective method that investors are using to streamline your policy, according to Michelle Hutchison, spokesperson for insurance comparison site finder.com.au. For example, if you raise your policy excess from $300 to $1000, you will be required to pay less on your premiums – although $700 more on your excess if you make a claim. Hutchison cautions that policy holders embarking on this strategy should ensure they have the cash flow to pay the increased excess on any claim. At the same time, they should accept they will have to pay out of their own pocket all small claims so as not to raise their risk level in the eyes of their insurer – and potentially attract higher premiums as a result.
4. Pay all policies annually: Another streamlining strategy is to pay all policies annually at a reduced rate rather paying your premiums by the month. This requires stumping up a lump-sum payment each year for the policy’s renewal, but the savings achieved over monthly payments can be quite significant.

Tailoring the home insurance policy for your property is necessary to make sure all your important items are covered. Reading the fine print and making sure you are aware of any loopholes can help you make changes to your policy to protect your home and possessions.