Home Insurance `underestimated'
Newcastle Herald
Thursday October 23, 2003
GRAHAM and Lisa Groizard learnt the hard way just how important house insurance is.
Almost one year ago, bushfires razed their Abernethy home in the Hunter Valley and destroyed all their possessions.
``Pretty much everything just disintegrated," Mrs Groizard said yesterday.
The Groizards' home insurance policy covered less than a third of the cost to build a new house on the property, leaving the couple to pay more than $110,000.
Mr Groizard said the past 12 months had been the toughest in his life.
``We have done it pretty tough," he said. ``It certainly takes its toll on you.".
Stories such as the Groizards' have prompted the Insurance Council of Australia to warn householders to adequately insure their property or risk suffering the awful consequences.
Council spokeswoman Heather Reid said many homes in the Hunter were uninsured or lacked adequate cover.
The latest national figures estimate 20 per cent of homes are underinsured, some by up to 90 per cent, while 68 per cent of people renting properties are without contents insurance.
According to a survey released yesterday by the Commonwealth Bank, those figures are on the rise.
CommInsure managing director Peter Beck said the percentage of people with home building insurance had dropped from 49 to 45 per cent and those with home contents insurance fell from 62 to 58 per cent.
``This is a worrying trend with people choosing to bear the risk of personal or property loss themselves at a time when household debt levels are at an all-time high," he said.
Ms Beck said people needed to look at the broader cost of replacing their house and contents when taking out an insurance policy.
Expenses people usually forgot included:
removing debris from a property, which can cost up to 10 per cent of the house value
variables such as inflation, GST, architecture, engineering and council costs
extended temporary accommodation, and
the cost to replace collections of CDs, jewellery and other items that sometimes have a claim limit under normal insurance policies.
``People also accumulate goods and belongings, so we encourage them to reassess the level of their insurance cover and make sure it reflects true replacement value of their property and its contents," Ms Reid said.
© 2003 Newcastle Herald
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