The cost of private health insurance has increased by 5.6% in April, and a recent ‘Choice’ report states that some health insurance policies only cover 1% of treatments in hospital.

 

This is a good time for you to revisit your insurance policies.  Often you don’t realise there is a problem until you make a claim.

 

 

Choice have also previously found that a number of the supposedly independent insurance comparison sites are actually owned (sometimes through subsidiaries) by an insurance company.  Insurance is an area where you either need to speak to a broker who you trust, or do your own extensive research.

 

You probably don’t think about the number of insurance policies in your life.  The average working Australian probably has compulsory third party insurance and comprehensive motor vehicle insurance, private health insurance, death and income protection insurance (probably attached to your retail superannuation fund), house and/or contents insurance, and from time to time travel insurances.

 

That is before you think about other insurances like the worker’s compensation insurance, mortgage insurance and credit card insurance that all impact upon you but you have little control over.  If you run your own business then you should really revisit your business insurance.

 

Sit down and have a look at your insurances and, apart from asking whether you are paying too much, also ask yourself the following questions:

 

 

General insurance tips

  • Read the policy, don’t rely on what the sales person told you.
  • Have you reviewed your policies recently? Has your address, usage patterns, driving history or the make up of your family changed?
  • How much is covered? If you insure for 75% of the full value, then often when you make a claim even for partial damage, they only have to pay for 75% of that damage.
  • What is covered, for instance damage from all storms or is your car not covered for a hail storm?
  • Can you choose your repairer, doctor, replacement vehicle, or other providers?
  • Is it cheaper to bundle your various insurance policies?
  • Is the cheaper option really better in the long run, for instance, if one policy or bundling policies results in a broker who you can contact to progress your claim this may be more valuable you realise, people in call centres are more likely to cause additional hurdles.
  • In relation to all of the questions asked below, is that feature (or lack of feature) important to you, is it worth paying more for?

 

 

Car Insurance

  • What is covered:
    • Is an at fault driver covered?
    • What type of cover do you need or want? If you have a very old car, it may not be worth it to insure it for replacement.  Do you just need CTP, or also comprehensive, third party property, or fire and theft?
    • Does the car have modifications and would those be covered?
    • Are children’s car seats covered by your car insurance or by the manufacturer of the car seat? Are they covered for a crash only, or for other events?  For instance Safe n Sound have a crash exchange policy, but if your car is stolen and you have to buy two or three new seats you will be significantly out of pocket.
    • If your car tows anything (a caravan, boat or trailer) does your policy have an exclusion for towing, and is the thing you are towing covered?
  • Who is covered:
    • Who can drive the car?
    • Is just the driver covered for personal injury or also the passengers?
  • How much is covered:
    • If it is replacement value what is the definition of replacement value? Some insurance companies have a schedule and it can be half the market price of a replacement vehicle.
    • If personal items are stolen from the vehicle are they covered, and how much is covered? If you frequently transport a work lap top for instance, would you be out of pocket to replace that?

 

 

Home and contents insurance

  • Who is covered? For instance, if you have gotten married after buying the house are your spouse’s possessions covered?
  • How much is covered, can you realistically rebuild the house for that amount?
  • How much is covered in relation to contents? There are many free online calculators or checklists that you can use to figure out the cost of replacing your contents.  Can you realistically re-buy your contents for that?  Do you want a new for old policy?
  • What is covered?
    • Is a flood, hail storm, bush fire, or vandalism covered?
    • Are all fittings covered (for instance ducted air or the new deck) or do they need to be added?
    • Are portable items (like your laptops or tablets) covered when you are outside of the home?
    • Are expensive contents covered, like your electronics (tablets, gaming systems, big screen TV and sound equipment), or your engagement ring or heirloom jewellery, or do you need to list those items (usually you will need to pay an additional amount).

 

 

Private health insurance

  • Why do you need it? If you are only getting insurance to avoid the health care loading on your tax return, beware of junk insurance policies which may not give you any more coverage than Medicare already does.
  • Who is covered, some policies cover children for free, have you added them?
  • How much is covered:
    • All of the hospital fees or only a percentage?
    • What is the excess?
    • Is there an annual limit, a combined limit across the policies or people in your family, or a limit on the time you can spend in hospital?
  • What is covered?
    • Do you need hospital, extras, ambulance, or all of the above?
    • If you want cover for extras, how much do you currently spend on ‘extras’ and how much will you spend with the extras cover, what is the gap for providers in the area you live?
    • Are you planning to start a family, and is this covered?
    • Are you only covered for an accident, or are you covered for all hospital admissions?
    • Are you covered for common serious diseases like cancer, stroke or heart disease?
    • Are you covered for rehabilitation after a serious disease?
    • Are there any waiting periods? If you are transferring insurance the new company will probably waive the waiting period if you have already served that period with the previous insurer but you may need to obtain a document from the previous insurer before your waiting period is waived.
  • If you aren’t covered for voluntary, cosmetic or reconstructive surgery then how is that defined? Is a knee replacement or removal of a gall bladder voluntary?  Is breast surgery after breast cancer considered cosmetic?  Is a hip or knee replacement covered?  Are you covered for a ‘voluntary’ psychiatric admission?
  • Are there any pre-existing conditions that you need to declare?

 

 

Life and income protection insurance

  • Who is covered:
    • Have you made a binding death benefit nomination?
    • If you have lost capacity have you nominated who deals with your finances?
  • How much is covered:
    • Will it be enough for you to live off?
    • Will it be enough for your spouse or children if you die?
    • How much would you need to pay off your mortgage or to continue to pay the rent?
    • Could you or your family afford medical expenses?
  • What is covered?
  • If there are exemptions can you get a new policy without them?
  • Have you declared all of your pre-existing medical conditions?
  • Are you covered if you sky dive, commit suicide, or participate in a high risk job?
  • How quickly will they pay? The average length of a claims investigation is 18 months.

 

 

Business Insurance

  • Who is covered:
    • If you can’t work, will you be reimbursed for your lost wages?
    • If a sub contractor does some work is it covered? If you get injured what is your protection?
  • How much is covered, if you have a fire how long can your survive on the pay out from the insurance company?
  • What is covered? Just damages or also lost wages for your employees (otherwise key staff members may move on, if they do, will your business survive?)

 

 

Travel insurance

 

  • Who is covered, for instance if your spouse is sick are you expected to go on holidays without your spouse?
  • How much is covered:
    • Is there a financial cap or limit, and if so will that reasonably cover medical expenses in that country? For instance in the USA a hospital stay from a motor vehicle accident can cost six figures.
    • What is the excess and can you afford it?
    • Do you have to pay medical expenses upfront and then claim the money back and if so, do you have access to the funds to do this?
  • What is covered?
    • If you booked your trip on a credit card, does that come with travel insurance, and what does that insurance cover?
    • Are you taking any valuables with you on your trip and if so are they covered?
    • If you are caught in an airport for a few days, will accommodation be covered?
    • Are pre-existing illnesses covered?
    • Are there exclusions for skiing, sky diving, rock climbing, or any activity you will be participating in on holidays?
    • If you are injured in a rental car or you cause an accident are you covered? If you disobey road rules (run a stop sign) or drink and drive (limits vary in different countries and different states within those countries) will you be covered?
    • Are you travelling to an area that the government has warned against, will you be covered, what level of warning is allowed, and what happens if the warning level changes while you are away?
    • What if your passport or visa doesn’t arrive in time, or is revoked?

Other insurance

There are many other insurances, like for instance pet insurance, worker's compensation insurance, public indemnity insurance or landlord's insurance, that may not be covered here but you should still review.  Unfortunately, simply having insurance is not enough.  There may be either so many exclusions, or only a couple but exclusions of the things that you are likely to need, that there is no value in having the policy.