How to compare policies to get the right coverage to suit your needs
When comparing insurance policies to find the right price and cover, there are a few things to keep in mind. Make sure that the policies you compare actually reflect what you’re looking to be covered for, and that you aren’t risking underinsurance.
Why you may not want to use comparison sites
Comparison sites can offer a high-level summary of how policies appear at first glance, but some may not provide the depth of understanding that researching them yourself can provide.
- They may not list all the options available – which can include optional covers that are cheaper for you.
- They may be owned by companies with interests in selling their own products.
- They may receive commissions on the links to the products they recommend, which can impact their impartiality.
When comparing policies yourself, you can focus on the specific providers that interest you, and tweak your quote to reflect your needs accurately and clearly, and see how it compares across providers. That way, you can get a more comprehensive understanding of your options and how they might address your needs.
That doesn’t mean you should avoid comparison sites 100% of the time – as we said, they are great for providing a top-level comparison of the basics. But for comparing the details, consider researching it yourself – which means digging into the relevant Product Disclosure Statement.
Compare like-for-like
It’s no use comparing a policy with all the bells and whistles to one that’s bare bones – one will obviously cost more than the other, if it offers more cover.
Compare like-for-like by making sure the details you enter are the same from quote to quote. That’s things like:
- the excess
- the building sum insured or if the policy offers Complete Replacement Cover*
- the contents sum insured, and
- any optional extras, if they’re offered by all the insurers you’re comparing.
Know what’s included and what’s optional
Not all policies are created equal. What may be included with one insurer’s policy may be listed as an optional extra for another, and this can make comparing a bit tricky. Make sure you’re aware of what is counted as an optional extra or an automatic inclusion, and what may not be included at all.
For example, AAMI has motor burnout cover automatically included in our Home Insurance policy. This covers the reasonable costs of repairing or replacing electric motors in household equipment or appliances which are part of the building that have fused or burned out and where that motor is less than seven years old. Other insurers may offer motor burnout as an optional cover in exchange for paying extra on your premium instead.
By taking the time to do your research, you can better understand your options and may save on your premium.
Explore AAMI Contents Insurance
Common mistakes to avoid
Basing decisions on price alone
Choosing a policy based on price alone can lead to headaches at claims time. You may want to consider a few more key factors, like:
- the company’s reputation
- the percentage of claims that are paid out, and
- the customer experience, from updating your policy to claiming.
There may be other factors that are important to you and your needs, too.
Underinsuring yourself
Going for the cheapest possible cover may run the risk of underinsurance – this is when the amount you have insured your building and contents for isn’t enough to cover the full cost of rebuilding, repairing or replacing your home and its contents, following a claim.
These out-of-pocket costs can really break the bank, so it’s up to you to carefully consider your needs and budget, and decide on a level of risk you’re comfortable with before choosing your cover. AAMI’s Home Building and Contents Calculators can help estimate how much you would need to rebuild your home from scratch or replace all your contents.
We all want our home and belongings protected against life’s surprises.
But what if there is an insured event and the amount listed on your certificate of insurance isn’t enough to rebuild your home or replace your contents?
This is known as underinsurance.
Underinsurance can happen for many reasons:
If your home or contents are not valued according to their repair, rebuild or replacement costs when purchasing or updating your policy.
If you renovate your home but don’t adjust the building value on your policy – also known as the sum insured.
If you purchase new items, like appliances or furniture, but don’t adjust the value of your contents on your policy.
With the cost of living rising, it may be tempting to have a lower sum insured to save money on your insurance premium.
But if you need to claim, your insurance policy might only cover a portion of the repair, rebuild or replacement costs, leaving you to pay the rest.
When it comes to choosing a set sum insured for your policy, there are a few simple steps you can take to help avoid being underinsured.
Use the AAMI Home Building and Contents calculator to get an estimated rebuild cost for your home and estimated total replacement costs for your contents.
A qualified builder can also provide further help with estimating rebuild costs according to current building standards.
Make a list of your belongings to ensure your contents sum insured is accurate. For particularly valuable items, take a photo, note their value, and save any receipts.
Keep this list up to date by adding any new items you purchase for your home.
No two home insurance policies are the same, which means it’s important to read your policy documents.
Knowing what your policy does and does not cover, and any limits that apply, will help give you confidence that you’re covered if you ever need to claim.
With AAMI, you can also choose our optional Complete Replacement Cover for the home building.
Complete Replacement Cover is our best protection against underinsurance as we’ll repair or rebuild your home as it was or pay you the amount of the assessed quote to repair or rebuild it, without you needing to set a sum insured.
And remember, don’t set and forget. As your life circumstances change, so should your home and contents insurance policy.
Regularly review your policy details to ensure your cover is up to date and meets your needs.
Download the AAMI App or log in online to update your policy.
And for other helpful tips, visit the AAMI Informed site.
Read more:
- How and why to avoid underinsurance
- How much should you insure your house for?
- What is AAMI Complete Replacement Cover?
*With AAMI, if you have selected the optional Complete Replacement Cover with your Home Building Insurance policy, and if your home needs to be repaired or rebuilt after an insured event, we will offer to repair or rebuild your home as it was, or pay you the amount of the assessed quote to repair or rebuild it – without you having to set a specific building sum insured. Learn more.
Insurance is issued by AAI Limited ABN 48 005 297 807 AFSL 230859 (AAI) trading as AAMI. Read the relevant Product Disclosure Statement before buying this insurance. The Target Market Determination is also available.
This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it.
The information is intended to be of general nature only. Subject to any rights you may have under any law, we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon the information. Please make your own enquiries.