It's easy to forget how personal insurance protects your finances, especially as changing priorities and circumstances can affect your coverage needs.
Failing to review your policies regularly can leave you vulnerable to gaps in coverage or burdened with unnecessary costs. An annual insurance check-up is essential to ensuring your insurance cover remains relevant and fit for purpose.
Here's why reviewing your insurance is a smart move.
Common life changes that impact your insurance needs
All sorts of changes can affect your insurance. Have you recently renovated your home, moved to a new house or purchased valuable items? Each of these situations can alter your risk profile and the type of coverage you need.
For example, a home renovation might increase the value of your property, requiring an adjustment to the sums insured on your home and contents insurance. Similarly, moving to a new location could mean different risks, such as flood zones or crime rates.
Failing to update your policies to reflect the following changes could leave you underinsured or over insured.
1. Changes in residential property
- Renovations or upgrades: adding an extra room, remodelling your kitchen or upgrading your roof can require adjustments to your homeowner's insurance.
- Moving to a new home: may introduce new risks, such as flood exposure, higher crime rates or different building codes.
- Purchasing a second property: buying a holiday house or rental property requires additional insurance cover.
2. Changes in your possessions
- Acquiring new valuables: purchasing items like art, electronics or collectibles may require an extension to your existing policy.
- Selling or decluttering: if you sell high-value items or downsize your possessions you may be able to reduce your cover and save on premiums.
3. Changes in your vehicle
- Buying a new car: if you opt for comprehensive coverage, the value of your new car will affect your premiums.
- Adding a teen driver: when your child starts driving your car your insurance premiums may increase.
- Selling or paying off a car loan: if you sell a car or pay off a loan you may be able to remove lender-required policies.
4. Changes in family dynamics
- Marriage or divorce: getting married may allow you to bundle policies for discounts, while divorce may require adjusting coverage.
- Having a baby: a growing family may prompt you to increase your life insurance coverage.
- Kids moving out: you may be able to adjust some aspects of your insurance to reflect the change.
5. Changes in employment or income
- Starting a home business: working from home may require additional coverage for business equipment or liability.
- Job loss or career change: a change in income may prompt you to reassess your insurance needs and adjust premiums.
6. Changes in lifestyle
- Travelling more frequently: travel insurance premiums increase with your age and you may want additional coverage for items you take abroad.
7. Changes in risk exposure
- Natural disasters: moving to or living in an area prone to floods, cyclones or bushfires may require specialised coverage.
- Security upgrades: installing improved home security may reduce your premiums.
8. Changes in legal or financial status
- Inheritance or windfall: may involve getting additional coverage for new assets.
9. Ageing or retirement
- Retirement: may change your income and lifestyle, prompting a review of life and health insurance.
- Ageing assets: older homes or vehicles may require different types of coverage.
10. Changes in health
- Chronic illness or disability: a new diagnosis may require adjustments to health or disability.
- Health or fitness changes: improvements like quitting smoking may qualify you for lower life or health insurance premiums.
By regularly reviewing your insurance policies with consideration of these life changes, you can ensure your coverage remains relevant, cost effective, and aligned with your current needs.
The cost of underinsurance and over-insurance
If your coverage doesn't reflect the true value of your assets or the risks you face, you are underinsured and could end up paying out of pocket for damages or losses, while over-insurance means you're paying for coverage you don't need.
During an annual review, you can assess:
- whether your coverage limits are adequate
- if your deductibles are reasonable
- whether you're taking advantage of all available discounts.
It's also an opportunity to update your insurer on any changes that could impact your premiums.
The value of working with a broker
Navigating the complexities of insurance can be challenging. Brokers are experts at analysing your particular situation so they can tailor policies to meet your needs. They can spot gaps or redundancies that you might miss, ensuring you're neither underinsured nor over insured.
They also have access to the industry network of insurance products and providers, allowing them to find the optimum coverage at the most competitive rates, saving you time, money and stress.
