Insurance

By knowing exactly what your requirements are and shopping around for the best deal you can make sure your most valuable possessions are covered in a cost-effective way.

Comprehensive car insurance

When your car insurance renewal slip arrives in the mail, it’s tempting just to pay up and forget about it.

But car insurance is one area where there is some competition and a bit of innovation.

Choice compared 30 insurance policies and found consumers can save hundreds of dollars and still access a policy with excellent insurance coverage.

By shopping around for comprehensive car insurance, the potential average savings across all states and territories were: $981 for a young male driver; $531 for an adult couple (or singles); $637 for an adult couple with an at-fault accident (or singles); $472 for an older couple (or singles).

Since many of the features are the same, the biggest discrepancies in premiums come down to who is driving the car.

Basically, the best ways to save on premiums are to increase the excess and restrict the drivers. (the excess is a fixed-dollar amount you’ll pay on most claims).

Most companies allow you to lower or remove the excess for a higher premium, or increase it to reduce the premium.

If you do increase your excess to reduce your premium, don’t choose one that’s too high or it will rarely be worth making a claim for minor damage.

Some companies give you a discount on the premium if you nominate certain drivers only or restrict the use of your car to drivers over a certain age (for example, 25). Review this option regularly and never let an excluded person drive.

If there’s an accident, you’ll pay a high additional excess or you may not be covered at all.

Home and contents insurance

When it comes to insuring your home and contents, underinsurance has been a persistent issue, a Canstar Cannex financial analyst, Joshua Zenas, says.

Generally, home and contents products have three different levels: defined event cover (such as earthquake, fire, storm), accidental damage cover (includes accidents that happen in the house, such as spilling red wine on the sofa) and motor or fusion cover for burnt-out electric motors.

Zenas says people find it hard to calculate or put a dollar figure to the cost of rebuilding their home. “People generally put a dollar value for their home using the wrong approach,” Zenas says. “The value of building does depreciate but not the cost of rebuilding it.

“People have to take into consideration the cost of building material, cost of labour, cost of design/approval cost and so forth.”

To counteract this problem, insurers have started to provide full rebuilding cost cover - that is, cover you for the full cost involved in rebuilding your home based on the specifications you provide.

This is not based on sum insured. While taking the quotes, you would be asked details such as the number and size of bedrooms, types of fixtures, and so on.

As many people discovered during the 2011 floods, an insurance policy will only cover the events that it has defined.

Canstar Cannex looked at 58 policies and found 29 policies provided a flood cover as standard and four policies included it as an option.