New insurance industry data shows massive levels of underinsurance around the country – and people who rent their homes are the biggest worry.
Nearly two-thirds of renters have no home contents insurance, according to the Insurance Council of Australia (ICA), while 80 per cent of all homeowners and renters don’t have enough cover to restore their way of life if they lose everything in a disaster.
A third of householders don’t update contents cover when they buy new major household items, while one in 10 understate their needs in order to keep their insurance premium down.
The ICA released the figures – from an online survey of 900 people – to launch its new information website, Understand Insurance, which was developed to help people work out their insurance needs.
ICA chief executive Rob Whelan says underinsurance is “deeply troubling” for the broader community.
“Unfortunately, many property owners don’t realise they are underinsured until it’s too late,” Mr Whelan said at the launch of Understand Insurance in Sydney.
The most recent cases of underinsurance have emerged after the bushfires which destroyed more than 200 homes in the Blue Mountains, west of Sydney, in October.
“A high level of underinsurance will mean that many residents will struggle to rebuild their homes and their lives as a consequence of those disasters,” Mr Whelan said.
Underinsurance could be shrugged off as a matter for individual consumers: if people don’t want to buy insurance, they shouldn’t have to.
But NSW Police Minister Michael Gallagher says people without adequate insurance aren’t playing fair.
“It is deeply concerning, not just for the government but I think for the wider community as well, that a significant proportion of victims in recent natural disasters did not have sufficient insurance coverage for their losses, or indeed no insurance whatsoever,” Mr Gallagher said at the launch.
“I think it’s fair to say that it’s simply not fair to those who do get the appropriate level of coverage.”
The minister said a “not insignificant proportion” of emergency services in NSW were funded through levies included in insurance policies.
Mr Whelan says the site is aimed at getting people to understand their insurance.
It features insurance calculators, educational articles and buying guides covering the basics of understanding risk, making a claim and managing insurance needs.
“It’s about making people understand that they have to do their homework around what their needs are,” he said.
Tips for avoiding underinsurance:
- Check the cost of rebuilding your property, including demolition, architectural, council costs, etc
- Check inflation isn’t eroding your cover level
- Use home and contents calculators to assess cover needs
- List expensive items separately on contents policy
- Understand your risks – fire, flood, storms, etc
- Understand your responsibilities too: claims can be denied if, for example, your house is not properly maintained.