Millions of Australian homes risk underinsurance: how to check if you’re still covered
Underinsurance is majorly overlooked by many Australians, and it's only gotten worse in the last few years.
Recent figures from quantity surveyor firm, MCG, has revealed that approximately 11.4 million Australian homes are at risk of underinsurance due to years of construction cost inflation.
Underinsurance occurs when there is a gap between the amount your home is insured for and the actual cost required to rebuild your home and replace your belongings. For the average homeowner, this can cause massive out of pocket expenses if you need to make a claim.
"Many homeowners simply don't know what it would actually cost to rebuild their property today," MCG Quantity Surveyors director and property insurance expert Marty Sadlier told 7NEWS.com.au.
"Without a proper replacement cost assessment, people are effectively guessing, and guessing is risky when your home is your biggest asset."
Want better home insurance?
Start comparing
Homeowners risk cover due to cost
Whether Aussies are aware of their underinsurance risk remains to be seen, though many homeowners have previously admitted they are willing to sacrifice cover because of the cost of home insurance.
A recent YouGov survey commissioned by the Climate Council found that 22% of Australians are considering cancelling their home insurance policy if extreme weather conditions caused by climate change continue to drive up premiums.
Finder research from early November last year reflects a similar attitude with 1 in 10 skipping a home insurance claim to avoid a rise in their premium.
What you can do right now to prevent underinsurance
Checking your home has the right level of cover is more simple than you think. Online calculators can provide you with a rough guide with how much your home would cost to rebuild.
If you do want to take a more professional approach, booking a professional valuation can give you clearer guidelines.
Once you have any idea of what your property should be insured for, update your insurance policy. It may also be worth reviewing other elements of your policy, like content cover.
There's a good chance the update will increase your premium, however, it will mean you have sufficient cover should the worst happen.
While you should be reviewing your policy at least once a year, it's easy for things to slip through the cracks.
If your home insurance policy no longer suits your needs, you can compare your options by visiting Finder's home insurance comparison page.
Sources
Ask a question