Why do I need home & contents insurance?

A recent court case in Queensland should serve as a reminder to all that home insurance and contents insurance is absolutely crucial.

In this case, Silwood v Chandler [2016] QCA 273 a visitor to a defendant’s home slipped on a step which had been washed down that afternoon and not dried. It appears that was no sensor lighting in place and due to the time of night the fact that the step was wet was not visible to the visitor. The visitor slipped and put their arm through a glass window sustaining serious and disabling injuries to their arm. Legal action was taken against the homeowner and despite the fact that the visitor had been to the premises many times, the visitor was awarded $650,000 in damages.

Australia is becoming more litigious, and we can’t hide from this. According to the Australian Bureau of Statistics, nearly 30% of Australian Households don’t have contents insurance. You need contents insurance to make sure you have the funds to replace your belongings in the unfortunate event that they are damaged or stolen.

In addition, and very importantly, a contents policy automatically includes personal liability cover. This covers the insured person’s legal responsibility to pay compensation for:

• bodily injury or death to another person
• loss or damage to another person’s property, that is caused by a personal act or omission of the insured person
  

Some examples where you may be found personally liable include:-

• damage to your landlord’s property in respect to those who lease
• your pet causes bodily injury to another party
• you have a bicycle accident hurting someone else or damaging a vehicle
• people injured at your BBQ and other home gatherings 
• the children’s birthday party should guest suffer injury
  

Besides the personal liability cover offered by home and contents policies, they do of course provide cover for your property.

With the number of increased severe weather incidents over the past decade as well as devastating bush fires, the reality is that it is at some point in the future, your property could be affected. Should you not have contents insurance please give further consideration to effecting cover. Should a policy already exist now would be an appropriate time to re-assess the level of cover and value. Look at the areas of risk that cause you the most concern and ascertain if cover is available. If flood is a priority ensure that either a new or existing policy will cover this contingency.

There are many ways to keep the cost of this insurance down as opposed to forgoing protection. Some suggestions are:-

• choose a higher excess – if you are not really concerned about small loss amounts, then a higher excess will keep your premiums down
• consider grouping your personal insurances both home and car with the one insurer. Many insurance companies offer incentives for this course of action.

To assist with the payment of premiums remember many insurance companies offer pay by the month options for a reasonable additional charge.

When trying to determine the value of your contents, consideration should be given to the case where you have to replace everything - all your clothing, iPhones, laptops, entertainment unit, refrigerator, furniture and not to mention the smaller items such as cutlery, cooking utensils and numerous other insignificant items that go towards making up a home.

There are also items that may need to be specified such as jewellery, paintings, sporting goods, cameras and the list and values continues to increase. When it is considered what was started off with in respect to our possessions compared with what is now a reality it does not take much to see the dollars mount up.

Do not assume all policies are the same – some are quite basic, and do not provide any protection for your belongings above certain amounts or outside the home.

It is also important to conduct regular reviews of your policy and make appropriate adjustments as many insurers will increase your values each year only to allow for inflation. Use the prompt of your annual renewal or the purchase of new contents to do this in order to avoid under-insurance.

PLEASE NOTE: YOU SHOULD READ INDIVIDUAL INSURER’S POLICY DOCUMENTS FOR EXACT DEFINITIONS FOR WHAT IS COVERED BY THEIR POLICY.

This is general information and is merely a guide and does not constitute financial advice, nor does it take into account your individual circumstances.

If you believe that this issue is relevant to your business, please feel free to contact Rebecca Fleming, Account Manager of our Travel Industry Division at Gow-Gates Insurance Brokers on (02) 8267 9919 or rfleming@gowates.com.au to discuss your circumstances or to obtain a review.