Making Smart Choices When Buying Insurance
Purchasing insurance is a personal decision about how you want to protect yourself financially if something unexpected happens. In Australia, there’s a wide variety of insurers and insurance products available, giving you plenty of options to find coverage that fits your needs.
Be Prepared Before Getting a Quote
To get an accurate insurance quote, come prepared. Understand the risks you face, know the value and details of what you want to insure, and decide how much excess you’re comfortable with. Also, be aware of the cooling-off period—usually at least 14 days—during which you can cancel your policy without penalty if you change your mind.
What to Do Before Buying Insurance
Before committing to a policy, consider the following:
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Identify what you want to insure and the risks involved
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Research different products and providers available on the market
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Check if you’re already covered under existing policies
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Ask questions about policy features, exclusions, and excesses
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Understand the value of your insured items and the potential financial impact of a loss
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Think about any additional coverage you might need
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Review cover limits carefully
Comparing Insurance Policies
Insurance policies can vary widely between providers and even within the same company. Coverage, terms, exclusions, and costs can all differ. Always read the Product Disclosure Statement (PDS) to understand exactly what is included and excluded.
You can find lists of Australian insurers at resources like www.findaninsurer.com.au. Reach out to insurers directly for quotes and clarify any doubts. Personal recommendations from friends and family can be helpful, but the final choice should suit your individual needs.
Using Online Comparison Tools
Online comparison sites can be convenient, but be cautious. Some only show a limited selection of insurers or focus heavily on price without delving into coverage details. Always prioritize your specific coverage needs over price alone.
What to Look for When Comparing Policies
Choosing the right insurance isn’t just about the lowest price. Consider these factors carefully:
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Coverage: Does the policy protect against the risks you’re likely to face? For example, flood coverage varies between home insurance policies.
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Exclusions: Understand what’s not covered to avoid surprises later.
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Definitions: Terms can differ between policies—make sure you understand them.
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Sum insured: Check that the amount insured is adequate for your circumstances.
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Limits: Some policies cap coverage on specific items—consider how that affects your protection.
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Excess: Higher excesses can lower premiums but mean more out-of-pocket costs when you claim.
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Service: Think about how easy it will be to contact your insurer when you need to make a claim or ask questions.
Balancing Cost and Value
Price is important, but cheaper policies often come with more exclusions and lower coverage limits. Make sure your chosen policy provides the protection you need.
Excesses, Discounts, and Savings
Your premium reflects the risk you bring and the excess you agree to pay. Generally, agreeing to a higher excess lowers your premium. But remember, if you claim, you’ll pay that excess first.
You might also qualify for discounts—like multi-policy bundles, no-claims bonuses, online purchases, or being a senior. Always check your Certificate of Insurance to ensure you’re receiving all eligible discounts.
Getting the Right Quote
Research is key. Compare multiple policies and quotes before buying. Many insurers offer discounts if you bundle policies (like home and car insurance) or maintain a good claims history.
Be honest and thorough when providing information during the quote process—this includes personal details and any factors that affect your risk, such as your driving history or property location. This is called your duty of disclosure and helps ensure your policy is accurate and valid.
Understanding Policy Inclusions and Exclusions
Before you buy, read your policy’s exclusions carefully. These are the scenarios or events that aren’t covered. For example, travel insurance may exclude certain extreme sports or events like terrorist attacks. Home insurance might limit coverage for flood or storm damage depending on where you live.
If your chosen policy excludes something important to you, shop around—different insurers offer varying terms.
Premiums Reflect Risk
Insurance premiums are based on the insurer’s risk exposure. Policies with fewer exclusions and broader coverage generally cost more because the insurer assumes greater risk. Conversely, cheaper policies often come with more restrictions.
Making an informed decision means balancing your budget, coverage needs, and the risks you face. Taking the time to compare, ask questions, and understand your policy will help you get the best protection for your circumstances.
