A ‘feel-good factor’ is creating a comfort zone for thousands of upwardly mobile families as they add to their personal possessions – but without proper insurance safeguards these householders could find the good times turning bad.
This policyholder alert comes from leading short-term insurer, Mutual & Federal.
Merrick Oeschger, Executive General Manager, Personal Business, notes: “When things are going well, the last thing you need is for a burglary, freak storm or some disaster to turn things sour. Things really go from bad to worse if you then discover that you were under-insured or were not covered for certain losses.
“The best safeguard is a regular insurance review of your short-term insurance cover in consultation with your insurance adviser – and the first quarter of the year is the ideal time as your cover can be affected by Christmas spending or new purchases.”
Unfortunately, feel-good consumers easily become locked into a comfort zone and fail to check their cover. Vulnerability increases every time they let things slide. Sometimes reviews are neglected year after year, warns Oeschger.
The hidden danger of the ‘feel-good factor’ has increased in recent years.
Oeschger points out: “The non-agricultural economy has been growing at 5% a year for some time. Wage settlements have been averaging 6.5%, comfortably above the 5% to 5.5% inflation level.
“Household spending on ‘durables’ peaked in the first quarter of 2006 when there was year-on-year growth of 18%, but was still growing by 7% year-on-year by the third quarter.
“These statistics mean one thing – many families are enjoying a significant increase in dispensable income and in response are purchasing luxury items for the home.”
Unfortunately, many families forget to review their policies and forget about their new lounge suite, home entertainment system, jewellery etc.
Oeschger adds: “For the feel-good factor to continue you have to feel certain your insurance cover is adequate.”
A good first step is to call in your adviser and review insurance needs and current cover.
Mutual & Federal suggests a simple check-list:
* Itemise all household items, including new purchases, and make a reasonable assessment of the replacement value. Remember, at 5% inflation some items may cost significantly more to replace than when you first bought them.
* Make a list of all valuables that are worn or carried out of the home; e.g. laptop computers, cellphones, jewellery and expensive branded items such as handbags. Such items have to be specified in the All Risk section of your insurance to ensure they are covered.
* Consider all improvements or changes to your home and the effect this may have on your cover.
* Review the wording of all covers, with particular emphasis on limitations and exclusions. Limits may have to be raised and some exclusions re-considered as your personal circumstances change.
Sometimes, new household purchases and additions will add to your exposure and premiums will have to be adjusted to ensure adequate cover in the event of loss. However, an adviser can also alert you to possible savings.
Savings may be possible by improving the security of your home – things like burglar-proofing and alarm systems. Some insurance policies offer discounts and savings in specific circumstances (perhaps retirement or relocation to a secure complex). If you qualify, make sure you claim these benefits.
Oeschger concludes: “Today’s professionally qualified insurance adviser is ideally placed to assist the consumer. He can assess needs, review covers and suggest solutions. Call him in and schedule a comprehensive review – not just this year, but every year.”
Article provided by: FAnews