Life Lesson No. 592: You get what you pay for!

Life Lesson No. 592: You get what you pay for!

I should have known better.  But I was in a hurry. 
 
I needed a Certificate of Insurance quickly for the settlement of my new home. So I jumped online and got myself a policy with a big insurer (one that sponsors football teams and has ads on radio).
 
My main concern was making sure that the policy would cover the property while unoccupied and undergoing a non-structural renovation. The cheap online policy provided me with this cover (I was smart enough to check the 68 page Product Disclosure Statement for this detail!).
 
I got my certificate and emailed it to my mortgage broker. And I thought to myself,  "When we move in, I will cancel this policy and arrange a better one.
 
The "better" policy I was thinking about was an Accidental Damage policy.  This is the highest level of cover for your home and covers many things that a standard policy excludes. 
 
Move forward 3 months, We moved into our lovely renovated home. A few days later, a new bed was scheduled to arrive and I moved the old bed and base outside. 
 
Unfortunately, the old base had a very small bit of exposed metal. The result: A big scratch on my beautiful and newly installed wood floor!
 
I hoped I could buff out the scratch with some polish, but alas, I could not. 
 
My carpenter quoted $1,500 to remove and replace the damaged timber.
 
Pretty soon after this, I cancelled my cheap policy and arranged an Accidental Damage policy. This policy would have fully covered the repair of my floor.
 
In addition to covering the repair of my damaged floor, the top notch Accidental Damage policy also covers:
  • Random accidental damage caused by my kids (ie: Broken vase) 
  • Mechanical and electrical breakdown, eg: dishwasher, air con breakdown
  • Medical expenses if my pet is injured at home
  • Replacement of locks in case I lose a key (which given my track record, is a claim waiting to happen!)
  • Tax audit cover if I am unlucky enough be to audited by the ATO
  • Identity theft cover (big threat, these days)
The price difference between the cheap online policy and high level Accidental Damage policy was $300 - With hindsight, excellent value for money in my opinion. 
 
I learned two lessons here:
Firstly: Insurance broking is my profession, however, I am not an expert when it comes to home insurance. It's a bit like asking for your specilist tax lawyer friend for help writing your will - they know the basics but they're not an expert!
 
Secondly: You get what you pay for!
 
General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.

Nathan Rayner, Arthur J. Gallagher & Co.

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