House Insurance :-(

**101RRS** · 4th April 2014, 01:11 PM

I have had my house insured with AAMI for quite a few years and up til now their policy was for a replacement house of the same style etc as my current house with no particular amount nominated. Basically replace like with like.

I have always been a bit sceptical so I kept lots of pics etc so that if the worst ever happened we would all know what we were talking about.

Also makes it hard to compare insurance quotes with other companies when I do not have a value.

I just received my insurance renewal and as usual it has gone up whicg you expect but when I looked at the specs of the house it was as if we were talking about someone elses house. No balcony, no central heating, one garage instead of 2, 3 bedrooms instead of 4, single level instead of my contemporary tri level.

I ring them and they said they had changed to a new system and that they did not not previously capture the building details and default information had been entered. Well not true.

Anyway going through the information they asked about the quality build of the house which in 1972 when it was built was very high - not one bit of aluminium - everything is cedar.

So not comes to the updated quote - an extra $200 please. But now you have the option of just a like for like replacement as before or a fixed value - their estimate for my house is $771,000. Now that is just the house, clean up costs and admin. That would be a record for my suburb - and that is for house and land.

When I queried it they said it was because I had said my house was of a high quality build and if I went for average build the value would be $450,000 (a little low).

When I asked how the they determined if the house was high build quality or average build quality was on whether the kitchen in the house had granite bench tops and high level appliances or laminate bench tops and average appliances.

Also whether the windows were aluminium or timber (mine were timber).

So if I had granite bench tops and modern appliances there would be over $300,000 difference in value

. The fact is that for 1972, my stove was about the most expensive available (that would be the only appliance and it is still there working fine) and the kitchen being mixed timber and laminate was top quality for the time.

Yes it is starting to get on a bit but $300,000 difference in the value of a house purely in the whether my bench tops are granite or laminate is totally ridiculous. The consultant was not able to explain the reason for the huge difference when I could put in granite bench tops for a few grand and claim $771,000 for the house if it burnt down.

I guess they would then say it was over insured and not pay the full amount despite them chosing the value.

Garry

BigBlackDog · 4th April 2014, 01:18 PM

I just got my new house insured with AAMI and was the same sort of deal regarding quality. I got to choice an insurance value for the building though so I was comfortable with the value. I guess it's hard for someone sitting behind a desk to value a house accurately when there is such a variation of values, even within a single suburb

DiscoMick · 4th April 2014, 01:21 PM

Get some other quotes. You might be surprised. Loyalty means nothing to the insurance companies.
Another angle might be to get a building company estimate to rebuild your house. It wouldn't have to be an exact copy, merely something from their online brochures about a house of similar size, design and quality, for a ballpark figure.
That would give you more information to use when negotiating with the insurers.

**Judo** · 4th April 2014, 01:27 PM

Damn Garry, I have that same policy with AAMI. I guess I should expect the same thing when my policy is up for renewal. I chose AAMI because it was so simple with their "replacement" cost policy and their price was competitive. All the others where I had to choose between a few crappy options for "build quality" made all other companies seem terrible.

Thanks for the heads up...

**Chucaro** · 4th April 2014, 01:59 PM

I am with APIA and very happy with it. I know few people that have problems with AAMI

**harlie** · 4th April 2014, 02:08 PM

Originally Posted by DiscoMick

...
Loyalty means nothing to the insurance companies.
....

There is the concept of "Loyalty Tax" which according to many in the finance and marketing industry is real. Personally I agree.

Loyalty Tax is where the price automatically increases on renewal because statistics show the vast majority (well over 80%) of people do not question or shop around when their renewal comes. Go to their website and enter the details – I bet you get a cheaper quote as a “new” customer for exactly the same cover.

Another top example – one of the parking companies in BNE offers monthly parking pass to car park X for $289. After the first month the renewal comes at $319 - 2 months later the renewal comes at $349 – a 20% increase in 3 months for a “Loyal” customer that pays by the month in advance. By this time it is cheaper to pay daily via earlybird conditions. However when I complained and cancelled and reapplied via the web site – you guessed it the monthly pass is $289. Several I work with signed up and all got hit with the Loyality Tax.

As for build quality. Anyone in the home building industry or those of us who have built recently can confirm it is easy to add a couple 100k in “extras” to a base house. It is not just granite bench tops (which most builders are including for “no extra” at the moment). Change the wall material, add decretive cornices, porcelain tiles, timber windows (more than double ally), high ceilings, smart bus electricals (40k just there) ect ect.

I live in a modest size home but it is all hard wood and on stilts. It's rebuild cost is estimated at nearly twice that of a home on slab with the same floor plan, so there really are heaps of variables.

Unfortunately insurance companies are too generic, and there is too many variables for their costing models to consider. All my properties are valued by a quantity surveyor, admittedly, for tax purposes and the report is extensive – but it gives me a good build replacement cost. Insurance is then to the value of his report, reviewed anually. A quantity surveyors report is expensive for the exercise of home insurance, but a Valuer (like the banks use for mortgage valuations) will also give a good estimate of rebuilding cost and might be worth it for piece of mind.

Other interesting point is building costs are presently still lower then pre GFC, some of the builders are doing some very good deals.

Originally Posted by Chucaro

I am with APIA and very happy with it. I know few people that have problems with AAMI

haha - what the age limits for them? As someone who's age starts with a 3, funny.

**Chucaro** · 4th April 2014, 02:17 PM

Originally Posted by harlie

.................................................. ..............

haha - what the age limits for them? As someone who's age starts with a 3, funny.

You will get there, eventually

**101RRS** · 4th April 2014, 02:19 PM

Originally Posted by Chucaro

I am with APIA and very happy with it. I know few people that have problems with AAMI

They are the same company - just marketed differently.

**101RRS** · 4th April 2014, 02:27 PM

Originally Posted by harlie

As for build quality. Anyone in the home building industry or those of us who have built recently can confirm it is easy to add a couple 100k in “extras” to a base house. It is not just granite bench tops (which most builders are including for “no extra” at the moment). Change the wall material, add decretive cornices, porcelain tiles, timber windows (more than double ally), high ceilings, smart bus electricals (40k just there) ect ect.

You are of course quite correct and if that was what the insurer was basing the difference on then that would be fine but the three criterion used was kitchen bench tops, kitchen appliances and whether the windows were timber or aluminium - nothing else. Age and built quality of the house is not relevant.

Cheers

Garry

**Chucaro** · 4th April 2014, 02:28 PM

Originally Posted by garrycol

They are the same company - just marketed differently.

They are underwritten by AAMI but they are offer different service. The times that I have used them for car, home and special contents they were second to none

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