Making Your Money Work

Why insurance really matters

Insurance helps cover the costs of unfortunate events, such as losing your living because of illness or disability, or your home in a fire. It protects the financial safety of you and your family, and your property.

Common risks and how to insure against them

Common risks	Insurance product	What can reduce your insurance premiums
Damage or loss to a home building and fixtures	Home building insurance	Adequate maintenance, smoke detectors, sound electrical wiring
Loss of home contents	Home contents insurance	Window and door locks, burglar alarms, smoke detectors
Damage to someone else's vehicle or property	Third party property insurance	An accident free driving record
Loss or damage to your motor vehicle	Comprehensive insurance	Security devices
Death and total and permanent disability	Increased life and total and permanent disability insurance through your superannuation fund or a personal policy	Using your super fund if the policy suits you
Sickness and temporary disability	Income protection insurance (this is tax deductible) Private hospital medical insurance Trauma insurance	Check if your super fund offers suitable insurance
Unemployment	Generally you can't insure against unemployment	Not applicable

How much cover do you need?

If you make a claim, the maximum an insurer will pay you is the amount of money, or 'sum insured', in your contract. That sum has to cover everything.

Most people underestimate the value of what they own and 'under-insure'. If you under-insure, you won't get enough money to cover the total cost of your loss. For example, the 'sum insured' for your home must be enough to cover all your costs if your home were destroyed, including rubbish removal, alternative housing and rebuilding costs.

Check your cover regularly, so that your sum insured keeps up with building costs and any renovations. Increasing your sum insured won't necessarily cost a lot of money. Shopping around, or choosing a higher excess, could get you more insurance at about the same cost as your current policy.

Although many insurers have internet calculators to help you work out a reasonable sum insured, not all calculators are the same. Use a calculator that asks you lots of questions (up to 30) about your home, because you're much more likely to get a more accurate sum insured.

How do you get the best cover?

Shop around and get a few quotes. To give you a quote, the insurer will ask you various questions. Answer all questions fully and honestly. You must tell them all the facts that could be relevant, otherwise the insurer may be entitled to refuse or reduce payment on a claim. You may save on insurance premiums by agreeing to pay an 'excess'.

If you can afford to pay for the first $500 of damage to your home or contents, you may get a reduced premium. Packaging several insurance policies with one insurer may also save money.

Compare the actual cover offered in each quote. Go through what the policy covers and what it excludes with a fine-tooth comb. Many people find out only too late that something was not covered. Insurance covers only what's defined in the policy and nothing else. A cheap policy that doesn't cover what you need could be worse than a more expensive policy with unnecessary features. If you have special needs, seek expert advice before you take out insurance cover.

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