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NewsKayley's Home Insurance Lesson
Kayley's Home Insurance Lesson

Kayley's Home Insurance Lesson

When it comes to insurance, we’re told they are all essential. Consider the following:  Home Insurance – insuring your greatest asset? Maybe. 

  • Income Protection – insuring your greatest asset? If you don’t have income you can’t pay for your home insurance right?
  • Funeral Insurance – Based on the idea that you don’t want to leave your family with the burden of your loss and also the cost of your funeral.
  • Private Health Insurance – Who wouldn’t prefer the doctor and hospital of our choice without lengthy waiting lists?
  • Pet Insurance – Vet bills – need I say more?
  • Travel Insurance – If you have ever been sick overseas you’ll know this is a no brainer.
  • Car Insurance – This one is compulsory

Fortunately I haven’t been in a position to make many insurance claims aside from the odd hospital claim or minor car accident but recently a storm created a water feature in my kitchen (watch here).

I contacted my insurer who sent 2 accessors to inspect the damage. What they discovered was a poorly constructed section of roof, installed long before I moved in. Basically it was only a matter of time before lots of water got in.

Here’s where it gets tricky. Was the damage to the property caused as a result of this particular storm on this particular day or had water been coming in for some time?

My insurer approved my claim for internal damage, however, they wouldn’t cover the roof damage as it had obviously been there for some time and furthermore, if I didn’t get it fixed, they wouldn’t cover any future damage to the house as a result.

Storm damage can potentially cost insurers tens of millions of dollars. Back in 2016, floodwaters inundated the main street of Picton south of Sydney. A bitter feud ensued after several insurer’s disagreed on whether the damage was caused by flood or storm water. For the record, storm damage pays out more than flood damage. For several businesses, just 10cm worth of water damage would be covered under existing storm damage policies; everything above that would be classified as a flood resulting in reduced payouts.

However, other insurers came to a different conclusion, classifying the disaster as storm damage, fully paying out claims.

That was nothing however compared to the devastating flood that hit Qld in 2011 leaving 38 people dead across 90 towns and causing an estimated damage bill of $2.38 billion.  Again consumers hit back at insurance companies by walking away from firms that they felt hadn’t looked after them.

Thousands of policyholders cancelled and changed providers to insurer’s which provide cover for any type of flood.

What this magnifies is the need to understand your insurance whether it’s home, car or health.

Different insurers cover in different ways and it’s important to get advice or read the PDS to find out whether flood cover is provided  as part of the standard cover, as an optional extra , or not at all.

 

According to the office of the Financial Ombudsman, water damage is defined as follows:

 

1. Storm damage

The general view taken by the general insurance industry is that flooding of a property by rain water would normally be regarded as storm damage.

2. Flood damage

Currently insurers define ‘flood’ differently. The definition your insurer is using in your policy will be stated in the Product Disclosure Statement (PDS). Broad agreement has been reached on a common definition of ‘flood’ as part of the reforms announced by the Federal Government.

Various flood insurance offerings are now available in the market. Some insurers offer mandatory flood cover. Others allow you to opt out of flood cover. Some still exclude flood damage, although this is likely to change with the introduction of amendments to the Insurance Contracts Act. It is important that you select the cover that suits your situation.

The source of the water that damages a property will be a critical factor in an insurer’s decision about whether or not the damage is covered under an insurance policy. You should refer to your PDS to see whether your insurer covers you for flood and/or storm damage. If you are confused about what you are covered for, contact your insurance company.

Insurance is based on risk and there is room to move when it comes to premiums, excesses and coverage. The key is to spend some time comparing policies. Like any purchase, we all want to get value for money. Don’t part with your hard earned money without understanding what you are getting in return.

http://www.fos.org.au/custom/files/docs/fact_sheet_natural_disasters_flood_and_storm_insurance_claims.pdf

Any advice provided in this article is general in nature and does not take account of your individual circumstances, objectives or needs.Always read the Product Disclosure Statement (PDS) before making any decision about buying insurance

 

Originally posted on .

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Andrew
Andrew from WA commented:

I was taught to tell the truth growing up as a kid and so it continues.......... Telling the truth doesn't always help...... well in this instance I was lucky...... Our ceiling in the kitchen, family and games room collapsed!! We heard creaking in the roof the night before. Before the company we had phoned to come and inspect first thing in the morning arrived, the ceiling collapsed!!! So we phoned the insurance company and the immediately came and sent out the their safety people to come check and prop up where necessary. When asked how it happened we shrugged our shoulders and said it just fell!! WRONG answer!!! If someone has fallen through whilst up there doing "something" they would have paid out for repairs. Some Mates said we should have hosed some water into the roof to they would have paid for water damage!!! So onto the builders who built the house 10 years ago... thankfully I remembered calling them out to check a bit of sagging in the ceiling 2 years after it was built .... all recorded thankfully. I told them insurance wasn't paying out due to "faulty workmanship". They agreed 2 days later to come and repair. What a disaster!! Even took it to the ombudsman..... came back with Product disclosure with the faulty workmanship"clause highlighted!!! The insurance companies are making their customers fib to ensure their claims are paid!!!!! But I reckon people have been doing that for ages anyhow!! 

Gertraud
Gertraud from ACT commented:

1) Income Protection - as a self-funded retiree my income comes from super, so no, I don't need income protection insurance. 2) Funeral Insurance - absolutely NOT! I'm afraid my children will have to pay for the cremation of my body when I'm gone until my assets are distributed among them. As for my ashes, I want them scattered at a place of their choice. Private Health Insurance - Nope, don't believe in it Pet Insurance - Another insurance that isn't worth the paper it's printed on Travel Insurance - yes, I wouldn't want to have to seek medical treatment overseas. My credit card covers this. Car Insurance - Absolutely. Only third party personal insurance is compulsory, which leaves taking out insurance for property damage. 

Mavis
Mavis from QLD commented:

The same thing happened to me. The trouble was with the damaged bedroom ceiling. The Insurance Co. asked to have the roof repaired first before they would cover ceiling repairs as it was a maintenance job. Fortunately, my son was able to fix the tiled roof. 

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