Thread: Home Insurance - Under Insured?

If I was in the position that I was worried about a bush fire, I'd move out.

But, yes, I take your point about under insuring. You also should take into account the cost of clearing the site and disposing of the rubble too.

Agree. My son lost his house about eighteen months ago. Fortunately the house was insured on a "replacement" basis, but the cost of rebuilding (an identical house except for changed regulations) was, in my estimation, about doubled compared to what it would have been without the compliance costs. Also, lost about six months due to the council could not make up their minds whether some of the requirements for a new build were needed (e.g. 20,000l rainwater tank). In his case insurance paid for a lot of his accommodation costs, but you need to think about this as well.

On a separate matter, his contents were underinsured - think about your house contents and remember you are looking at replacement cost, not market value.

John

When I wanted to renew with AAMI recently I had the opposite issue - if I had taken their estimate for the value of my house I would have had a suburb record price.

They would have been happy to take my premiums but if I had to ever claim I expect the payout to be quite a bit less than what they valued my house (a theoretical figure). The price they were going to insure was double the basic value of the house and about 1 1/2 times the replacement value including block cleanup and admins to build the new house.

Garry

Originally Posted by garrycol

When I wanted to renew with AAMI recently I had the opposite issue - if I had taken their estimate for the value of my house I would have had a suburb record price.

Garry

Agreed, I also got a quote with AAMI and there estimate was 100k more than the NRMA. 600k for house replacement for a Home+land worth 800k in Sydney seems well over the top.

When I insured my place last there was an option to have a higher payout in the case of bushfire or other large scale damage in the area. This was to cover the extra cost involved when many houses need rebuilding. I didn't take it though. No need here.

Originally Posted by Utemad

When I insured my place last there was an option to have a higher payout in the case of bushfire or other large scale damage in the area. This was to cover the extra cost involved when many houses need rebuilding. I didn't take it though. No need here.

Yeah I guess that is another consideration, builders will probably jack up prices if many home are destroyed in the same area due to demand. Maybe I should move to the coast and risk coastal erosion instead

Very interesting in about to do the same thing but its a little tricky as I'm in a body corporate with my neighbour so have to have both places evaluated .

Insurance is a tricky issue.
I was thinking the other day that something is a bit odd when it can be dearer to buy the land than to build a house on it.
I reckon at the moment I could buy another house better than ours for about the same as the cost of rebuilding what we have. For example, not far from where I live you can buy 4-bed two bath double garage houses on small blocks for about $350,000, which would be a similar cost to rebuilding our three bedroom two bath double carport house.
Makes it hard to know how much insurance is really needed or whether you'd be better just to take the money, sell the block and buy somewhere else.