Single Mum Wants Security

Hi Scott

My home insurance is up for renewal and (like Tegan who wrote in last week) I'm looking for a total replacement policy. You said you use an insurance broker -- is that the right step for everybody? And if it is, how can I tell which ones might rip me off? I am a single mum with two little boys and I am on a little income.

Janet

Hi Janet,

I’ve received a lot of mail about this, so now’s a good chance to explain how this all works.

There are a number of insurers who offer ‘total replacement’ policies, but it’s certainly not the standard in the industry. The standard is ‘sum insured’, which is pretty simple: you guesstimate how much your home would cost to replace and insure it for that value. If you’re wrong and the house burns down, the insurer will only cough up the sum you’ve insured for. You foot the difference.

Therein lies the problem. Most people have no idea of the true cost of rebuilding a home. A good insurance broker will know, and will advise you accordingly. They’ll also read through your policy and alert you to clauses that could affect your ability to claim. And, if you have to claim on your policy, a good broker will represent you.

How do you find a broker who won’t rip you off? It’s actually a lot like dating. Don’t fall in love with the first guy. Make sure he takes the time to educate you, rather than just selling you on how big his policy is. And always trust your gut. Good luck.

Scott