Time to act as home and contents premium hikes hit consumers
CHOICE says, with 89 percent of respondents to its latest insurance review reporting that they are paying more for premiums, it’s time for all levels of government to work with the insurance industry to improve local planning and infrastructure, particularly in towns where floods are inevitable.
The CHOICE report is based on a survey of over 2,200 members and a review of 74 different policies across 40 brands. ¹
“We know a lot of people are reporting premium price rises of 20-30 percent, but we’ve heard anecdotally of people facing increases of up to 1,000 percent for home and contents cover,” says CHOICE spokesperson, Ingrid Just.
CHOICE says action needs to follow flood disasters such as those in the NSW Riverina and south-west Queensland.
“Wagga Wagga in NSW escaped the worst of the flooding because its levy infrastructure was sound, and town planning laws meant that most homes and businesses were away from the flood plain. Roma in Queensland was a different story, with catastrophic results for local residents and businesses,” says Ms Just.
CHOICE’s report into home and contents insurance identifies positive moves by the insurance industry that will benefit consumers, including an agreed definition of flood² and a decision to introduce a Key Facts Sheet to help policyholders understand what they are covered for.
“The agreement on a definition of flood and the introduction of a policy Key Facts Sheet is a welcome move. We also want the industry to work towards simpler Product Disclosure Statements and policies that are more easily comparable,” says Ms Just.
CHOICE says that one contentious issue still unresolved is whether or not flood insurance should be mandatory or provided on an ‘opt-out’ basis.
"There’s no easy answer on mandatory flood insurance – people who have a low flood risk don’t want to pay for an extra they don’t need. On the other hand, if everyone is covered, it closes the coverage gap we now have,” says Ms Just.
With policyholders paying significantly higher premiums, CHOICE says they can take steps to ensure they get the best possible deal.
“If you get a premium bill that’s over the top, pick up the phone or go to see your insurer – if you have evidence to support your case, they may compromise,” says Ms Just.
“One CHOICE member told us about a premium jump of 40%. When they were able to prove that they lived in an elevated spot, well away from water, the insurer dropped the increase to 20%.”
CHOICE's tips when looking for the best Home and Contents cover:
1. Go online to see what the insurer is offering new customers - online offers may be cheaper than the quote on your renewal slip. If there is a difference, ask your insurer to give you the lower premium.
2. Be prepared to negotiate - it's cheaper for the insurer to keep you as a client than to attract new customers.
3. Know what the policy includes and excludes - if in doubt, talk to your insurer, broker or financial advisor.
4. Decide what you need - policies covering 'accidental damage' cost more, so think about a cheaper policy covering defined scenarios and then budget for other mishaps.
5. If you think you will rarely make a claim, consider paying a higher excess - it will lower your premium.
Read CHOICE's latest Home and Contents insurance review.
Media contact: Ingrid Just, CHOICE, Head of Media and Spokesperson: 0430 172 669
¹ The CHOICE Insurance Satisfaction results are based on responses from 2,200 CHOICE members for building insurance and 2,455 for contents insurers. Survey was conducted December 2011.
² Agreed standard definition of flood: "Flood: the covering of normally dry land by water that has escaped or been released from the normal confines any of the following: a lake (whether or not it has been altered or modified); a river (whether or not it has been altered or modified); a creek (whether or not it has been altered or modified); another natural watercourse (whether or not it has been altered or modified); a reservoir; a canal; a "dam".