Have you ever tried to get home building insurance online, plugged in your postcode or building type and been told no? Here we explore some of the things that might exclude you from taking out a policy.
All insurance providers and policies have different terms, exclusions and embargoes. What are exclusions and embargoes, I hear you ask? Well if you can spare a few minutes keep reading and I’ll explain.
An embargo is when an insurer stops offering their policies to people whose property is located in an area that is threatened by a higher risk event, like a cyclone, flood or fire. For example, if we know that a big cyclone is about to hit specific postcodes, insurers may stop offering insurance for properties in those postcodes for a specific timeframe.
Because the threat could be immediate and urgent, it can be hard to get information in advance about embargoes, but you will be told when you try to apply. You might be declined if applying online and asked to call the insurer, who should then explain the situation to you.
TIP! Insurance should be established well before natural disaster situations are declared or threatened. The sooner you insure your home, the more protected you are against unforeseen circumstances.
Different to an insurance embargo, exclusions exist when an insurer chooses not to cover certain things in their policies, such as a type of building or specific region or area.
For example, some insurers might not cover certain areas because their reinsurance cost (the cost to them for providing home insurance), is too expensive and would mean the premiums they’d have to charge you would be too high to be affordable.
On the flip side, this helps to maintain more competitively priced premiums for existing customers in areas that they do insure.
Postcodes can be added to an exclusion list too. Insurers may refuse to cover new clients but are more likely to honour renewal for current clients.
Some insurers might also shy away from more complex or risky properties, like heritage homes, or thatch, mud or clay properties. There are insurers out there who specialise in out of the box or unique properties; it’s just a matter of being aware when you purchase a home if getting home insurance could be a challenge.
TIP! If you are seriously looking to buy a property and you’re worried that it may be in an exclusion area, such as a bushfire or flood prone region, you can call a number of insurers to obtain a quote and see what they say BEFORE you make the leap to purchase.
Most insurers will have a maximum sum insured limit on home building insurance, e.g. $1 million. Remember, when estimating the price to rebuild your home don’t include your land value or contents in your estimation. Excluding the land your property is on, home building insurance generally includes anything that won’t fall out of the house if it’s tipped upside down and shaken, except carpet and curtains which are covered under Contents Insurance.
Some insurers won’t cover people with certain criminal convictions, but it’s important all questions are answered accurately as many insurers conduct checks at time of claim.
One of the most important things to do when buying home building insurance is to read the Product Disclosure Statement (PDS). Although lengthy, most are written in simple English so you can see fairly easily what you will be covered for and what you won’t be covered for. If you are unsure or have questions always call the insurer and ask.
Has an insurer given you a different reason why you can’t get home insurance? Tell us in the comments below.
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