Navigating insurance realities: Do you know what you’re covered for?

Many of us are experiencing higher costs of living. Included in this are higher premiums for insurance.

Insurance premiums are climbing with much of this attributable to extreme weather events and climate change. But are we getting value for money? Most of us really don’t know the details of our policies until it’s time to lodge a claim.

The Hayne Royal Commission handed down its report several years ago. The Australian Securities and Investment Commission ( ASIC ) also recently released its Report 768.

I had a recent event and lodged a claim with my contents insurer. I’m a Disability Support Pensioner, who resides in a flat that is part of an Owners Corporation, known previously as Body Corporates. My contents insurer is a large well-known brand that targets the over fifties as their market.

In February, I had a washing machine fault, which caused water to flow continuously for over 14 hours. Water flooded every room, saturating carpets, wetting skirting boards and affecting virtually every item of furniture. The water was absorbed by timber furniture resulting in swelling and mould growth. Soft furnishings including sofas, mattresses and base ensembles were all affected.

I have lived independently since I was 18 when I moved from country Victoria to Melbourne for University. I have maintained contents insurance my entire life. I have made only one prior claim. It was a lost pair of spectacles under a Personal Valuables claim. As a result, I felt I needed to speak to an operator.

I contacted my insurer by telephone. During my initial contact, I was informed it was better and quicker to lodge my claim online. Remember, the company targets mature-age Australians as its core market. We are not a heterogeneous group. Some of us are comfortable with the digital world, many are not.

I was informed there was a $200 excess. The company required this payment upfront. Our cohort is diverse. Many are still engaged in business or full-time employment, others are semi-retired and many are on limited fixed incomes, either the pension in full or in part or as a superannuant. A payment upfront is difficult for many.

I had taken out, what I had considered to be a comprehensive policy including electrical items. Upon claiming, I found they would not cover the washing machine. The policy fine print excludes any appliance causing the event. I had to replace the washing machine from my own personal resources. A major appliance is a major capital impost for most people at a time of increased costs of living.

I am telling my experiences here, to assist others. How many of us are aware of our policy coverage?

As part of the claim, I had to obtain a report from a service technician. Although this was subsequently reimbursed, I had to pay it upfront.

My policy includes temporary accommodation. This is ten per cent of the covered amount. In my case, this is $12,000. An issue here is that this sum is insufficient. There is a housing crisis in Australia, vacancy rates are at record lows and rents are climbing. I was placed in temporary accommodation. This did not occur until several weeks after the flood event, which meant I lived in an environment that was damp and smelly for several weeks with mould. The company did provide accommodation in excess of the policy clause, however, ceased funding after I had purchased a new bed and mattress. In the company view, a bed and mattress made the property habitable. This is despite the presence of mould.

I was provided with an estimate of contents in May, about three months later. I was paid a cash settlement in June.

I have had to dispute a number of amounts. Eight pairs of shoes were lost. The assessor estimated a value of $100 per pair. The shoes included brands such as Rockport, Windsor Smith and Florsheim. I challenged this amount. I had pillows that were memory foam, valued in excess of $100 each. The assessor valued pillows at $30 each. I challenged this amount and it was increased.

Readers here, need to know, that you can challenge assessed amounts. It is disappointing though, that the insurer has applied low valuations. I sought an increase which the company agreed to. I have not had to buy furniture items recently and I had no appreciation of value. When it came to the replacement of items, I discovered that costs are much higher.

The insurer’s target demographic is older Australians. Many of us are on limited fixed incomes and
have chronic medical conditions including illness and injury. We are more vulnerable.

Although mould has grown as a result of the insured event, they have denied support claiming it is structural and should be covered by the Owners Corporation. They will not support me with cleaning assistance or support. Mould obviously makes the property unsafe and unhealthy to live in. Yet the contents insurer considers it habitable despite this.

I worked in banking for over twenty years, and I believe in insurance. Sadly though my faith in insurance companies is diminished.

My accommodation and temporary storage are set as a percentage of the coverage amount. Many people would have low insurance. A person with just $50,000 in cover would have little in temporary housing.

I will conclude with a question. How many of you know what you are covered for?

Most of us don’t know until we have a claim.