Need to know
- Our experts compare national home and contents insurance to find the best policies and reveal the ones to avoid
- These three policies offer fewer features than others, but not at a cheaper price
- Our home insurance expert explains why you should avoid them and how to get a better deal
There's no two ways about it, insurance can be confusing.
You have to find the right cover for your needs – that's also within your budget – and read through pages and pages of product disclosure statements. But it can still be hard to know if you're getting a good deal.
In our insurance policy reviews, CHOICE's home insurance experts trawled through the data and found some products that offer very good cover, but also quite a few to watch out for.
Here are three policies they say you're better off avoiding if you don't want to end up with a dud.
The three home insurance policies to avoid
In a national comparison of home insurance policies, three stood out for their lack of value and features. They're from different companies with different product names but they all happen to be issued by the same underwriter.
"All policies in our review cover you for the same dozen or so insured events like fire and theft, but these policies were very light on extra features without it being reflected in price," says CHOICE home insurance expert Daniel Graham.
The three policies are:
1. Huddle Basic (CHOICE Expert Rating: 46%)
2. Real Insurance Essential (49%)
3. Kogan Essential (50%)
The cons outweigh the pros
These three policies have several good and bad points in common. Our insurance experts say they all have short policy documents compared to other home insurance products, which is a positive (let's face it: no-one likes reading product disclosure statements), and they all offer comprehensive legal liability cover for damage to a rented home.
The savings either weren't as great as we expected, or weren't there at all
But while their policy documents might be brief, the list of what's wrong with them is anything but:
- No underinsurance safety net
- No choice of repairer
- No cover for accidental damage
- No cover for damage caused by pets
- Limited cover for contents in the open air
"One of the most important features we look for is an underinsurance safety net, which gives you additional cover if your sum insured ends up being too low to rebuild your home," says Daniel.
"If you're on a budget and don't have very complex insurance needs these barebones policies might be attractive. Unfortunately when it came to our price comparison we found the savings either weren't as great as we expected, or weren't there at all.
"Huddle has really shaved their Basic policy down to the bone, getting rid of common features like cover for motor burnout and portable valuables."
What if these policies aren't available in my region?
We're glad you asked. You might have noticed that these policies aren't available in NT and north Queensland, and that's because things are a little different if you live at the top end of Australia.
"The Northern Territory and far north Queensland are difficult markets for home insurance," says Daniel.
"Any homeowner in the north will tell you just how expensive their insurance is, and insurers claim they only get razor-thin profits from those areas.
"Some budget, no-frills insurers simply don't bother operating up there. This means less choice and less competition."
Wondering why it's so exxy? Daniel explains it in this article about weathering a home insurance storm in northern Australia.
How to find a better deal on your home and contents insurance
If you've been paying for one of these lacklustre products and you'd like to hunt down a better deal, here's how to find one:
- check our insurance reviews (we would say that, wouldn't we?)
- get a few quotes and ask if your insurer will match them
- consider a higher excess to bring your premium down
- check what the going rate is for new customers – you can ask your insurer to match it
- consider multiple policies with one insurer to get a bigger discount.
Not sure where to start? Check our home and contents insurance buying guide.
CHOICE calls for standard terms in insurance contracts
Comparing home insurance policies can be a nightmare of a job. Insurance companies intentionally bury complex definitions and exclusions deep in Product Disclosure Statements that can run over 100 pages.
That's why CHOICE is calling on the Federal Government to introduce standard terms for all major events, such as fire in insurance contracts. That way, people will have peace of mind that they are protected and are not caught out by unfair fine print definitions when they go to claim.
After the recent tragic summer bushfires, CHOICE reviewed insurers' definitions of fire and found that over 70% had confusing, unfair or unclear 'fire' definitions. There is no standard definition of fire across insurance policies. This means individual insurance companies are free to define fire however they like – and these definitions can give them leverage to deny your claim.
People need certainty they will not be unfairly denied a claim based on a confusing or opaque definition
"All three policies ranked Borderline in their definition of fire," says CHOICE banking policy expert Patrick Veyret.
"That's simply not good enough. People need certainty they will not be unfairly denied a claim based on a confusing or opaque definition.
"The Federal Government needs to step up and mandate fair and clear standard terms in home and contents policies. This will raise the standard of dodgy home insurance policies offered by insurers."
Update (21/08/2020): An earlier version of this article was named 'The worst home insurance policies'. We have updated it to 'Three home insurance policies to avoid'.