Are you Insured?

This year's string of floods, cyclone and bushfires has pushed the topic of insurance well into the spotlight. Thousands of home owners, landlords and business owners have lost valuable assets and without insurance cover are struggling to make ends meet.

The devastation sends a strong message about the importance of insurance, whether it's for your home, business, motor vehicle or investment property. Not only is it important for your assets to be insured, but also that they are insured at an adequate level and that you are familiar with the terms and conditions of your policy.

It has been estimated that around 70% of Australian homes are under-insured*, which means that the value home owners have insured their home for is too low to actually replace it if it is damaged or destroyed.

To avoid under-insuring your home it is important to understand your policy - is it for a fixed sum-insured, a sum-insured plus margins for increased costs, or a total replacement policy? Each year before you renew your policy, adjust your cover to take into account the household items and possessions you have purchased over the year or any renovations you have done.

Here's an overview of some of the main types of insurance you might want to consider and what each can offer.

Building and contents insurance

The price and scope of these policies vary widely but their general purpose is to provide replacement of your property and its contents in the event of a threat like theft, fire, vandalism, storm or flood.

It is common practice to bundle the building and contents together but you can obtain separate policies for either.

Landlords insurance

This insurance covers for the specific risks of owning a rental property that are not usually included in a standard building and contents policy. Commonly this includes malicious damage by tenants, accidental damage, legal liability and loss of rental income.

Motor vehicle insurance

It's not only when you prang your car that you might need motor vehicle insurance, as many policies will also cover you for fire, storm, theft and malicious or accidental damage.

Life Insurance

Life insurance looks after your family financially if you're no longer there to provide for them, commonly in the form of a benefit to take care of everyday expenses.

Mortgage insurance

Should you suffer an illness, injury or involuntary redundancy, mortgage insurance will cover your mortgage repayments for a prolonged period. The amount of cover is determined by the amount of your loan and loan repayments.

*Australian Securities and Investment Commission, 2005

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