Home and contents insurance policies are very misleading and not subject to the normal language of law. Insurance is something we buy without actually knowing what will happen in the future. Here is a look at many of the myths and misconceptions associated with home, contents and other insurance.
Home insurance is an absolute necessity for most Australian home owners. The risk from a natural disaster is very high. Despite being such a crucial area of our lives, many myths and misconceptions exist. Here is a look at those myths and the issues associated.
- My policy says I am covered for a ‘flood’, and so I am covered. This is the largest area of concern for most policy holders. Your policy will have definitions for many situations that are covered in your policy. Understanding those definitions will be very difficult. Because it says “flood”, does not mean your situation will be considered so. This is the case with many terms in your policy contract. Each policy has its own definitions, and even those definitions will be subject to understanding at the time of your problem. Your insurer may understand it one way, and that may well be different to yours. Only two legal teams can fight out this disagreement in a court of law. What a policy says, and what it means, are open to interpretation. Policies are often written in a complicated legal manner which will make understanding them very difficult.
- My policy covers my home and what I own. Most insurance companies do not do a precise inspection of your property and belongings to save money. You need to understand the value of the policy you are paying for. You need to make sure the policy covers you for your particular home and belongings. Answering the questions in as much detail as possible in your policy, at the time of purchase, will only stand you in better regard. If you have not answered these questions correctly, or in enough detail, an insurer can use that against you in the future. Again you are only paying for what a contract says. And that will also get down to interpretation.
- I have paid my insurance for 30 years, my insurer is obliged to cover me. This is definitely not the case. Whether you have made one payment, or 300 hundred payments, will not make a difference. Your insurer will be looking at the situation at hand. You are rarely in better regard with your insurance company because you have not claimed before. They will decide a claim based on that case alone. You will not be viewed any differently because you have been paying them for years.
Choosing the right company for your home and contents insurance will be one of the biggest decisions you make. You will only find out if your insurer is going to look after you when it comes time to claim. It is always best to look at payout ratings on any company you choose. Never believe the hype, marketing or sales talk.
After completing this article, the obvious need for a second part became apparent. Look out for: Home and Contents Insurance Myths and Misconceptions PART 2
contents insurance written by Sachin.