As you move toward or into retirement you might want to consider if your home and contents are adequately covered. After all, your home contains years of hard work and memories and could be the largest single asset you own. When you reach retirement, you no longer have the security net of a wage to protect you, should you suffer a loss without adequate protection.
Over the years, the sum insured on both your building and contents can become unrepresentative of the actual value to replace them. This can be due to alterations or additions to the property over time, that may not have been considered in terms of arriving at an adequate sum insured. Examples can include installing a pool or outdoor shed or less obvious things like replacing the fences or including retaining walls for garden beds. It all adds up. In terms of contents, you may accumulate a lot of possessions over time without considering the cost to replace all your contents should the worst happen.
In relation to your building insurance, there are several building calculators that are available on insurers’ websites however the outputs can vary so it’s worthwhile trying several to compare the results. A great place to start is the Insurance Council of Australia’s website which includes information on “understanding insurance” and has its own calculator that even considers the specific location of your property. Alternatively have a builder or valuer assess the cost to rebuild your house to the same specification. Whilst this may cost more upfront, it could save you in the long run, ensuring you have sufficient cover to properly repair or replace your home.
The “Understand Insurance Report” published by the Insurance Council of Australia in 2013, found that up to 83% of Australian homeowners and renters were underinsured. On those results alone, many people could fall into the “underinsured” category.1
For estimating your contents, use a calculator and go room by room to do a stock take. You may be surprised at the value of the contents you own when applying the replacement value to the things you have accumulated over a life time. Jewellery and other valuable items including works of art, expensive rugs or so forth, should be given particular consideration. These items often have limits written into the policy capping the payout amount unless you specify them. It may not be the most exciting reading to do in retirement, but an hour reading your Product Disclosure Statement (PDS) for these limits could save you a lot of heartache in the event of a loss. Alternatively give your insurer a call and ask the consultant to explain them to you.
Travel is usually high on many retirees’ priority lists (well as soon as we have COVID-19 under control) and it’s important to plan for the security of your home and its contents while you are away. There are numerous ways to secure your home, varying in levels of complexity and expense. One of the simplest and cheapest security measures is to have someone house sit for you, or having lights and TVs attached to timers, coming on for a few hours each evening. More robust measures include installing deadbolts to all external doors and windows as well as installing local or monitored alarms. Don’t forget the value of community and befriending your neighbours so that you can watch out for each other.
If you are planning to be away and the property will be vacant for an extended period, it is important to contact your insurer as many policies have “un-occupancy clauses” that restrict cover. Most start at two months vacancy but please check your Product Disclosure Statement.
A small investment of time and effort now can provide reassurance that your most significant asset is adequately insured going forward.
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