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Insurance can be helpful for those looking to financially protect their assets, family or themselves. However, holding a number of insurance policies can add up to be a significant expense. That’s why it’s important to make sure your cover is competitively priced and well suited to you at your stage of life.
To help you get the most out of your policy, here are our three top tips.
If you’ve recently renewed your car insurance, home insurance or health insurance without shopping around, you may be paying too much.
In many cases, the premiums listed on a renewal letter can be higher than the previous year’s, even if you didn’t make any claims. While this could be for a range of reasons specific to your changing circumstances, it could also be a result of an insurer’s premium increase process that can catch out customers who don’t shop around. Insurers also often offer a lower premium to new customers to entice their business, which in some cases can mean remaining loyal to your insurer actually costs you more than switching.
So before paying to renew your policy, it may be a good idea to compare quotes from a range of different insurers in the market that offer you the cover and features you are looking for. With this information under your belt, you could either switch providers or use the findings to negotiate with your current insurer and see if they can offer you a better deal.
Some insurers may offer discounts on premiums if you choose to pay a higher excess for claims you make. When comparing policies or looking to renew, it is a good idea to consider whether a provider offers discounts and if so, whether these savings in your premium outweigh the potential cost of an increased excess.
But if you rarely make claims on your insurance and you’re confident you’ll have enough cash on hand to pay a higher excess, it could be worth a thought.
Different policies can come with different inclusions and levels of cover. Before you renew or switch policies, you should read the product disclosure statement (PDS) or speak to the insurer directly to understand what you are and are not covered for, and think about whether this is enough for your needs.
A good rule of thumb is to be careful you’re not paying for benefits you aren’t likely to use, but investing in the elements that are of most value to you. For example, if you are going skiing overseas and are looking at travel insurance policies, cover for snow sports is often not included as standard, meaning you may need to pay to have it added on as an extra. However, while you may choose to add the additional cover for snow sports, you may not be taking particularly expensive items with you and are therefore happy to choose a policy with a lower item payout limit in return for a lower premium.
Just as there are a number of different types of insurance people may consider over their lifetime, there are also a number of things to keep in mind when choosing or renewing a policy. Here we break down some of our top tips for a few of the common types of insurance in Australia.
When determining the cost of your car insurance premium, insurers often ask a number of questions to determine your risk profile, which in turn influences the cost of your premiums. These questions can include how often and how far you drive, where you usually park your car and your age. Try to keep your answers as accurate as possible – if an insurer’s information about you or your car is not up-to-date, you could be paying more than you need, or you might not be covered when you need it.
Another question you may be asked is whether someone under the age of 25 is likely to drive your car. Some insurers will offer cheaper premiums if young drivers are not covered under a policy, so it could be worth considering whether or not you need this cover.
Features such as roadside assistance, temporary car hire and accommodation cover, towing cover and genuine parts repair may not come as standard on all car insurance policies. If you value these inclusions, take them into account when comparing your options.
By understanding what risks your property faces, you can refine your search for policies that offer cover to suit your needs. For example, if your suburb has flooded in the past, you may want to think about getting an appropriate type of flood cover (storm surge or riverine). Note that sometimes insurers may not cover an event that is more likely to occur, or they may exclude that type of cover so they can offer cheaper premiums. In these cases, you may need to weigh up the potential savings with the increased risk you could be exposed to.
Many insurers offer optional add-on coverage, such as for fusion damage (including motor burnout), jewellery or other portable valuables and accidental damage. When they are optional extras, they typically come at a higher price tag, but some policies may include such cover at no extra cost. So it is a good idea to consider what cover you may want and take this into account when comparing home insurance policies.
It can be important to let your insurer know if you make any renovations or alterations to the property. These may impact the value of the home and not notifying your insurer could potentially leave you underinsured. Similarly, if you install a new security system, it is possible your insurer will offer a discounted premium, so it is worth letting your insurer know. If you have a contents policy, it is also a good idea to maintain an up-to-date register of what you own and check whether any new high-value item is covered under your policy.
When considering a health insurance policy, look at its inclusions and think about what you are more likely to need. For example, if you're young and healthy, it’s generally unlikely you’ll need cover for joint replacements and cardiac failure, but as you age, you'll be more likely to want this cover. While you usually can’t add or remove certain inclusions from a policy, you can choose a policy type that suits your needs.
If you rarely use any extras, or only use the policy to cover dental, you may not find it to be worth the premium you pay, so choose a level of coverage that suits you.
In 2019 the Federal Government introduced tiers for health insurance policies to help consumers more quickly determine the minimum amount of coverage that would be offered. However, not all policies within a tier are the same. For example, some Bronze Plus policies may actually end up covering more procedures than others, as they would cover the base services required to make the tier, but not quite enough to be classified as Silver. It is a good idea to look closely at what exactly is covered when comparing policies, rather than purely looking at the tier or premiums.
Most super funds, including QSuper, provide life insurance to their members. Our cover is designed to provide you and your loved ones with financial support when it matters most. Learn more here.
About the author
Mitch Watson has been working in finance research for more than 10 years. As Canstar’s Group Manager, Research and Ratings, he oversees the development and delivery of the company's flagship Star Ratings across banking, insurance, wealth, and other personal finance products.
Canstar Research provided by Canstar Research AFSL and Australian Credit Licence No. 437917. This is general information only provided by Canstar Research and it does not take into consideration your objectives, financial situation or needs. Consider whether it is right for you. Consider the relevant product disclosure statement before making a purchase decision.
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