Renovating or decluttering your home, or a change in circumstances, could introduce risks that your insurance policy may or may not cover. Plus, insurers may tweak the fine print of their policies due to changes in risks and the insurance market.

This article explains when and how to review and update your policy to ensure the coverage is right for you and your assets.

Annually

When reviewing your insurance cover, aim to start from scratch to avoid making assumptions about risks.

An estimate of the current value of your home is helpful but not the only factor used in working out the coverage required. That’s because building insurance covers you for repairing or replacing your home at your address rather than buying a new house on its own plot of land. Meanwhile, contents insurance covers your belongings.

It’s good practice to get in the habit of checking your insurance policies at the start of the year. Ensure you also review your coverage when your circumstances change.

When renovating

The renovations that could mean you’ll need to update your coverage include the following:

• Expanded footprint of your home, such as extending a family room or adding a bedroom, for example

• Added higher-quality finishes to the house

• A new garage, shed, pool, carport, etc

• Erected a new fence

• Invested in new furniture or art

• Recarpeted floors and bought new rugs

• New blinds (internal and external) and curtains and other window treatments

• Installation of a new dishwasher, stove, air conditioning, and heating.

Before you renovate, speak to your contractor about insurance coverage. They may want to buy building materials when available due to supply chain issues and escalating costs. As such, you may have to store these on your property. Check with us to find out whose insurance covers damage to or theft of these materials.

You will also need to speak to your insurer to confirm whether your current policy will respond while the renovations are being undertaken.

Rising home values matter

Perhaps you haven’t physically changed your home. However, fluctuations in house prices have affected the groundswell of the residential property market. If the value has increased, you may be underinsured; if it’s decreased, you could be paying too high a premium.

There are pros and cons to each of these options to value your property, according to the independent consumer organisation Choice:

• Sale price

• Real-estate agent quote, also known as a market appraisal

• Domain.com.au property profile (or from one of its competitors)

• Open agent (powered by Core Logic)

• A bank’s automated property profile report

• Independent pre-purchase market valuation by a certified practising valuer.

Revisit your policy to see if you’ve opted for ‘sum insured’ – your cost estimate for rebuilding your home after a major disaster. The other option is ‘total replacement cover’, the cost to repair or rebuild your home to the same standard, advises MoneySmart.

Not all insurers offer both, and total replacement cover tends to be pricier. So, if you’re using the ‘sum insured’ estimate, we can check if your insurer offers a safety net of up to 30% if your home is totally destroyed. Insurers under the General Insurance Code of Practice must provide you with access to a calculator that will assist you to estimate your sum insured.

When you do a cleanout

If you’re using the festive season to declutter your home, it’s also time to tidy up your insurance coverage. You may have less to insure. For example, if people have moved out of your home, such as housemates or adult children, the total value of your home contents may have shrunk. It pays to update your policy as the premium may drop.

We can help you review insurance

The insurance market is fluid and we can review your policy with you. This includes checking your current policy’s fit with your needs for:

• Inclusions and exclusions

• Excess – also known as deductibles – you agree to pay

• Maximum claim limits

• Coverage for mobile devices when you’re not at home

• ‘New for old’ replacement value

• Damage due to storms, floods and fires if you live in a disaster-prone area

• If another insurer’s policy might be a better fit for your current circumstances.

Save time and possibly secure a reduced premium using our expertise to help check your insurance coverage.