The other night after a watching a BBL match and having a few beers as one does, when one is watching one of these matches...well I do..it was about 1030pm..and I didn't feel like heading off to bed. So I channel surfed...a male thing to do...when one is bored with what TV has to offer these days...anyway..I hit the ABC news channel and a segment on the Bushfires and what this will mean for people who are under insured. I absorbed much of what was mentioned and had the feeling...WTF!!!..so I got my local Household Insurance policy booklet out and started reading the PDS.
Yep...so at about 1100 pm..I started reading a House Insurance PDS booklet..90 pages long...guaranteed to make someone "nod off"...
It didn't work..at 1241am...it hit me after reading the last 20 pages of the PDS...I am under insured for House and Contents by about 35 to 40%...maybe more.
Ok..how can you become under insured...
Just a simple exercise..you...yourself value your property at say about $500,000 for example sake...but you have a $200,000 mortgage on that property with a bank.
The place "god forbid" becomes completely damaged by a "listed" occurrence..ie flood...bushfire etc..
I say listed...because the insurance company 'Lists" or another word.."defines" what a Bushfire is..flood is..etc..each insurance company has their own definition..
Anyway...the property is cactus..you want to rebuild the property again..to what you want it to be with all the stuff you had on it and in it before...but the price of the reconstruction comes to about $650,000..this could be because of increase costs..debris removal, dispursement fees, council and design fees, building supplier costs..if your property has some asbestos..well..$$$$$ and headaches on that score..
So basically you are out of pocket about by the tune of of $160,000 give or take..
You decide it's too much trouble to rebuild...so you decide on a payout..
This is the interesting thing...
You have valued the property @ $500,000...but you have a mortgage of $200,00...so the banking institution has first call on the $500,000...which is your mortgage..so its'..$500,000 less the $200,000..so you will get back $300,000...but wait there is more..less again costs of disbursement of the mortgage earlier (if applicable by your bank)..legal fees, council rates outstanding...
Basically...your $500,000 valuation on your property has revealed after displacements that you are under insured....and are left with $300,000.
It is best to value your property PLUS add onto this...your outstanding mortgage amount...in this case...$500,000 Plus your mortgage of $200,000 and any other issues...like a second mortgage or grantee of the property for a business loan..personal loan...etc..
When I mentioned these issues to the insurance employee today..when I went in to see them.."You read the PDS".."Who does that?" was their reply...and "Yes, that is correct..if you want a complete payout..legal institutions and outstanding debtors have first call on the policy and the policy holder receives what balance is left over."
Insurance companies have insurance calculators which you can access on line and you fill in the information needed and out pops a figure that is the true value of your property for replacement...then you have contents...they have calculators for that as well...
Some sobering or late night reading..if you are still awake at 1am in the morning..
The results will surprise you...it did me..http://understandinsurance.com.au/do...ough-insurance
Enjoy...
Yep...so at about 1100 pm..I started reading a House Insurance PDS booklet..90 pages long...guaranteed to make someone "nod off"...
It didn't work..at 1241am...it hit me after reading the last 20 pages of the PDS...I am under insured for House and Contents by about 35 to 40%...maybe more.
Ok..how can you become under insured...
Just a simple exercise..you...yourself value your property at say about $500,000 for example sake...but you have a $200,000 mortgage on that property with a bank.
The place "god forbid" becomes completely damaged by a "listed" occurrence..ie flood...bushfire etc..
I say listed...because the insurance company 'Lists" or another word.."defines" what a Bushfire is..flood is..etc..each insurance company has their own definition..
Anyway...the property is cactus..you want to rebuild the property again..to what you want it to be with all the stuff you had on it and in it before...but the price of the reconstruction comes to about $650,000..this could be because of increase costs..debris removal, dispursement fees, council and design fees, building supplier costs..if your property has some asbestos..well..$$$$$ and headaches on that score..
So basically you are out of pocket about by the tune of of $160,000 give or take..
You decide it's too much trouble to rebuild...so you decide on a payout..
This is the interesting thing...
You have valued the property @ $500,000...but you have a mortgage of $200,00...so the banking institution has first call on the $500,000...which is your mortgage..so its'..$500,000 less the $200,000..so you will get back $300,000...but wait there is more..less again costs of disbursement of the mortgage earlier (if applicable by your bank)..legal fees, council rates outstanding...
Basically...your $500,000 valuation on your property has revealed after displacements that you are under insured....and are left with $300,000.
It is best to value your property PLUS add onto this...your outstanding mortgage amount...in this case...$500,000 Plus your mortgage of $200,000 and any other issues...like a second mortgage or grantee of the property for a business loan..personal loan...etc..
When I mentioned these issues to the insurance employee today..when I went in to see them.."You read the PDS".."Who does that?" was their reply...and "Yes, that is correct..if you want a complete payout..legal institutions and outstanding debtors have first call on the policy and the policy holder receives what balance is left over."
Insurance companies have insurance calculators which you can access on line and you fill in the information needed and out pops a figure that is the true value of your property for replacement...then you have contents...they have calculators for that as well...
Some sobering or late night reading..if you are still awake at 1am in the morning..
The results will surprise you...it did me..http://understandinsurance.com.au/do...ough-insurance
Enjoy...
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