The end of the financial year is often a time to reflect on how successful our “finance” year has been.
It is a savvy choice to make a resolution around your saving goals at EOFY when you can see exactly how your finances are situated.
A top tip is to understand where your money is going.
One area that many of us don’t understand is home insurance.
Each year you may receive a 100 page booklet or two that is filled with legal jargon and a bill. And like many, you may just pay it.
Home insurance is complicated.
It is important to take the time to look at the policy and make sure it is right for you. Cyclone Debbie was a timely reminder that the Gold Coast is subject to natural disasters. It is important to check that your asset is protected and you have the right cover for our part of the world.
Does your home insurance cover things like pool fencing, landscaping, and driveway?
Another point is to look at the Sum Insured amount. This figure is adjusted by your insurer each year to reflect rising values and costs.
Your premium will be adjusted to reflect this new amount.
If you are insuring your 4 bedroom, 2 bathroom home for $600 000 and disaster was to hit and you lost everything then your insurance company would work out how much it would cost to rebuild a 4 bedroom, 2 bathroom home on your land. This could be closer to $350 000. And even though you have been paying the premium for an insured amount of $600K you will only get the $350K.
There are many factors involved with calculating your total replacement cost including thing like the slope of your land, so there is not one figure that would be accurate for everyone.
If you were insured for the exact replacement cost in the above scenario, your premium would have been lower.
Your insurer may have an online calculator to assist you with estimating a replacement cost. If not, phoning and asking how they would calculate the cost on your home will help guide you as to the sum insured amount.
It is your responsibility to ensure that the sum insured you choose is enough to cover the replacement costs of your building at today’s prices.
Taking the time to review your insurance may save you money annually, and/or stress should the worst happen.
Home insurance is important from when you sign a purchase contract and it is worth taking the time to understand where your money is going and how your asset is being protected.