Home Insurance Savings Guide

Don't pay top dollar for Home Insurance. Use these tips and tactics to get the right cover for your home at the right price.

Guide Contents

    5-Step Guide to saving on your Home Insurance renewal

    The cost of home insurance can vary by hundreds of dollars, even with the same provider.

    If you spend a bit of time shopping around at renewal time, you can avoid paying what is often called ‘the lazy tax’.

    Here’s our simple 5-step plan for saving potentially hundreds of dollars when you receive your annual home insurance renewal.

    Top tip

    List the features you need and the quote from each provider you contact in a spreadsheet to easily compare them without feeling overwhelmed.

    Step 1: Set a benchmark by ‘mystery-shopping’ your existing provider.

    Most insurers charge existing customers more than new customers. They make their money from you in the 2nd, 3rd, 4th and later years if you just accept price increases and never shop around. So when you get your renewal price, go online to your insurer’s website as an anonymous shopper and get a quote for the same cover as you already have.

    This not only sets a benchmark for your next set of comparisons, but also gives you leverage should you wish to negotiate with your existing insurance provider.

    Step 2: Compare a few providers

    Give yourself half an hour to compare a range of different insurance providers. Look for a well-known price-conscious brand such as Budget Direct*,  Woolworths* or ING*.

    Then, find a premium insurance brand such as NRMA, Allianz, or AAMI. Finally, ask friends for recommendations and get a quote from one of their favourites.

    You can get online quotes directly on their respective websites or via a comparison site such as mozo.com.au* or canstar.com.au and record your findings within your spreadsheet.

    Step 3: Wait 24 hours!

    Now that you have compared a total of four providers, you should be able to see a clear winner in terms of price. If you want to reduce your premium even further, wait 24 hours before doing anything as many insurance websites send ‘cart abandonment’ emails offering you a further discount or freebie should you come back and accept their policy quote.

    Step 4: Ring your existing insurance provider (if you like them)

    If you have reasons for wishing to stick with your existing insurance provider, consider giving them a call to haggle a lower price. Explain to them that you did an online quote on their website and it’s far cheaper than the renewal form you received. Tell them about any other cheaper quotes you got. Sometimes it helps to calculate the percentage increase and clearly tell them it’s not acceptable.

    Step 5: Pick a winner

    Buy the selected home insurance policy online (usually cheaper than over the phone) and be sure to pay the full annual amount if you can. (Paying monthly will increase your premium by as much as 15% so always try to avoid this.)

    How to haggle on Home Insurance

    “Haggle” – VERB. To dispute or bargain persistently, especially over the cost of something.

    The ability to haggle effectively can be the difference between paying top dollar or saving hundreds on your next insurance premium.

    Haggling may not come naturally to all of us but with these handy hints you’ll be able to bring your negotiator’s A-game:

    Timing is crucial – It’s always better to haggle for a better deal when you’re at the end of your contract period. Retailers don’t want to lose a valued customer and will go to cost-cutting lengths to keep you. So play to your strengths, which is your insurer’s fear of missing out on your renewal.

    Know your stuff – Being able to haggle is one thing, but it’s always best to back your argument up with facts. That means having a couple of other quotes to compare and ‘mystery-shopping’ your provider so you know what they’re charging new customers.

    Speak to someone in charge – Make sure you’re haggling someone with decision-making ability. There’s no point sweet-talking the young customer service person. You’ll have much better chances of cutting a good deal by dealing with a manager. Be polite and direct in asking what you want as time is money. Remember, always cut to the chase.

    Think about bundling – Providers are often very willing to make a deal when you bring other products to the table like car insurance, credit cards etc. Ask them for their best offer if you bundle a number of policies with them. You might be pleasantly surprised by their answer. To quote The Godfather: “Make them an offer they can’t refuse!”

    Fact

    Some providers will knock hundreds of dollars off just because you’ve made a strong case for a better price.

    10 tricks you can try to reduce your Home Insurance costs

    To cut the cost of your Home Insurance, it pays to review your cover.

    According to an Insurance Council of Australia report, 1 in 4 Aussie homeowners don’t even know what’s actually covered in their policy.

    Here are 10 things you might be able to do right now to reduce the cost of your home and contents insurance:

    1. Shop around

      Many people can save hundreds if they look around a bit and make sure they’re not paying too much, and not paying for cover they don’t need. See our ‘5-Step Guide to saving on your Home Insurance renewal’. Websites that compare prices can be very helpful, but be aware that none of them cover all insurance brands (because the big home insurance companies don’t cooperate with comparison websites). So it’s worth looking at 2 or 3, such as mozo.com.au*, canstar.com.au, or iselect.com.au

    2. Increase your excess

      Your ‘excess’ is the amount you have to pay if you decide to make a claim on your policy. The Insurance Council of Australia explains: “If your home is damaged in a storm, the cost of repairing the damage might be $4000. If you had a $600 excess, you’d pay the first $600 and the insurer would pay the remainder.”

      Most insurance policies have a standard excess or a voluntary excess. The standard excess applies to every claim, while a voluntary excess is a higher amount you agree to pay if you have to claim, in return for a lower premium.

    3. Pay annually, if you can

      It may be difficult to pay a year all at once, but if you can do so, you could save as much as 15%. Get monthly and annual quotes, check how much the difference is, and work out if it’s worthwhile.

    4. Jewellery and other valuables

      If you have a lot of family heirlooms, they could be pushing up your premium substantially. Why not look into the cost of a safe deposit box for valuables you almost never wear, to increase their security and cut the cost of your contents cover?

    5. Join a group-buying club or consumer network

      Membership of One Big Switch* or The FiftyUp Club* or a motoring organisations (NRMARACQRACVRAARAC WA etc)  can unlock group-discounted offers on home and contents insurance that you can use as a jumping-off point for your research.

    6. Bundle your policies  

      Many customers choose to bundle all their different policies to take up multi-policy discounts. Depending on your needs, this can be an effective cost saving measure.

    7. Loyalty discounts

      If you’ve stuck with the same provider for years, then why not call them up and ask for a loyalty discount? Stranger things have been known to happen.

    8. Security

      By installing better security (even just locks on your windows) you can also reduce your home and contents insurance premium.

    9. Conduct a risk assessment

      Clutter, dodgy wiring, overgrown gardens, leaves in the guttering right through to pools and dangerous appliances are all potential hazards, which can easily be avoided with some due diligence.

    10. Estimate realistically

      Don’t overvalue your personal items and belongings just because of their emotional connection to you. The bigger the price tag you put on them, the more you pay in coverage

    Storm, flood and fire: what are you covered for?

    Believe it or not, there are worse things than having your home damaged or destroyed in a natural disaster, such as not being sufficiently covered.

    After the tragic “Black Saturday” Victorian bushfires of summer 2009, an estimated 13% of homes which required reconstruction or significant repair were not insured, according to ASIC Moneysmart.

    What’s more, many Australians who lost their homes in the Sydney bushfires of 2013 were also unable to rebuild them due to not having sufficient coverage.

    Many of the Brisbane flood victims of 2011 also suffered a similar fate when they found they were not fully covered for flood, leading the Federal Government in 2012 to introduce a standard definition of “flood” to help establish greater certainty for both insurers and policyholders.

    Industry-wide definition of flood: “The covering of normally dry land by water that has escaped or been released from the normal confines of: any lake, or any river, creek or other natural watercourse, whether or not altered or modified; or any reservoir, canal or dam.”

    The Insurance Council of Australia says the difference between storm and flood damage is now clear: “The storm might fill the river, but once the river overflows, that’s a flood.”

    Top tip

    Wherever you reside, your home and contents insurance should be enough to cover the cost of rebuilding your house and replacing your possessions.

    For those looking into a new policy and those who currently have a plan but don’t know exactly what you are covered for, here are some helpful hints from ASIC’s MoneySmart website:

    8 tips to be prepared for natural disasters

    1.   Remember, after the fact is too late, so get covered ASAP! There’s no such thing as post disaster insurance.
    2.   Regardless of your postcode, your home insurance cover must fit the cost of rebuilding your home.
    3.   With a little research, increasing your home & contents insurance coverage may not cost as much as you think, so shop around as you might discover more cover for a lower price.
    4.   Find out if you live in a disaster prone area.
    5.   Ask your local council if your home meets natural disaster standards.
    6.   Check with your current insurer whether you are covered for natural disasters such as storms, cyclones, floods, bushfires and flash floods. Make sure you read the fine print and ask questions for clarification of key terms. You can’t afford to leave anything to chance.
    7.   If you are not happy with your current level of coverage, ask for a better deal. If you’re still unhappy – switch providers. You are not locked in!
    8.   Consider taking out what’s known as a “Total Replacement Policy” where the insurer agrees to repair or rebuild your home to its current standard. It might be a little dearer but well worth the peace of mind. After all, your house is your biggest asset in life.

    Upsells and add-ons: do you really need them?

    So you’re thinking about reviewing your home and contents insurance and you’ve stumbled upon the mysterious world of optional extras or add-ons.

    They’re the insurance equivalent of the McDonalds upsell: “Do you want fries with that?”

    Many providers offer these as additions to the standard cover, but they can be confusing and can make getting a quote and comparing it to other policies more difficult.

    What are they?

    Optional extras are things not included in your initial coverage. In fact, some policies don’t offer full cover, but instead provide a basic level of cover and the opportunity to take up add ons. These can include burnout of electric motors, accidental damage, even public liability if you’re in the building game.

    Do you need them?

    Only you can answer this question as everyone’s needs and financial situations are different. However, depending on your circumstances, it might be beneficial to take up a few extras if you really need them and the price is right.

    So before selecting the upsells offered by your provider, you need to think long and hard about who is benefiting the most from the transaction. Is it you?

    Here is a list of 6 popular add-ons and what they cover:

    Flood cover – is defined as the covering of normally dry land by water that has escaped or been released from lakes, rivers, creeks or other natural watercourse. If you need flood cover, make sure you take up a policy that includes it, or buy it as an add on.

    Personal possessions – this covers those everyday valuable items such as mobile devices and jewellery. They might already be covered by your contents policy in the home, but in some cases, these high valued items can be covered when you’re away from the home as an add on.

    Accidental damage – a popular extra for those with young kids or grandkids. Most policies only cover damage from so-called insurance events, such as fire, explosion, theft or malicious damage. But most policies will not cover accidental loss or damage, except as an add on.

    Home emergency – entitles you to have an on-call tradesperson come to your rescue and fix that leaky shower pipe or blocked toilet.

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