With inflation capturing many of the headlines at the moment, it’s not a crazy idea to assess the insurance coverage for your home.
The rising price of materials for construction and the availability of labour have combined to push the cost of renovation, maintenance and replacement much higher.
Leading industry researcher CoreLogic says construction costs jumped 9% in the year to March. In the past five years, prices have leapt 25%. We haven’t seen the building industry under this cost pressure since the GST was introduced in 2001 and prices jumped 10.2%.
With inflation expected to rise above its current level of 5.1%, no one predicts this situation will ease soon. So re-evaluating your insurance coverage may be a smart idea.
There are a few areas that some insurance policies might not cover, catching you by surprise if something bad happens. Now is a good time to double-check your policies and maybe take the opportunity to shop around.
Acts of God
Do you know what this means in relation to the policy that you’ve taken out? Water damage is a classic example of an insurance company trying to dodge payouts by invoking the Act of God or force majeure clause.
Depreciation
Does your insurer depreciate aspects of your property, such as the roof. As it gets older, will its level of coverage fall? If so, you could be seriously out of pocket if a tree falls on your home in a storm.
Infestations
If you get hit by termites, will you be covered? In some cases, insurance companies have blamed the owner, claiming they should have been more diligent in reducing the opportunity of an infestation. Remedial work is expensive.
Pipe problems
While the pipes in your home might be covered in the event they burst, what about problems with the service lines on your property? Would you have to pay for them to be fixed if they burst in the middle of your front yard?
Security systems
Did you install a security system to obtain a double-digit discount on your insurance? Do you know what happens if you leave home and forget to put it on? Will you be covered if there’s a break-in and ensuing damage?
Be alarmed
Does your insurance company expect you to have a working fire sensor as part of your policy? If it’s not wired into the mains, when was the last time you replaced its battery? Does it work? If it doesn’t, could your policy be void in the event of a fire? A substantial blaze could be a financial disaster.
NOTE: The information in this article is general in nature and provided as a general overview only. Always consult your financial advisor or accountant for advice specific to your personal circumstances.