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Insurance – what do I need to know?

This factsheet talks about property insurance. It does not address personal insurance issues.

What is Insurance?

Insurance is a contract that protects you or your property against the risk of something going wrong in the future.

Insurance is important because it protects you from things like:

· Fire

· Flood

· Theft

· Cyclones

· Accidental damage to you or your property.

· Deliberate damage to you or your property not caused by you.

The most common types of insurance that people purchase are:

· Home Insurance

· Contents Insurance

· Car Insurance (See Flag Factsheet on Buying a car)

There are many other types of insurance policies available like pet and funeral insurance.

Before purchasing any insurance policy it is important to work out what benefits it provides you with.

What to look for when buying insurance?

There are two key things you need to decide:

· What do I want to protect; and

· How much can I afford to pay to protect it?

When choosing your insurance policy, you need to consider:

· What does the policy cover?

· What does the policy exclude?

· Its price - sometimes cheaper insurance policies provide you and your property with less protection.

· What excess do I have to pay if I make a claim?

· What happens if something goes wrong and I need to make a claim?

Different insurance policies work for different people, it is important to ask questions and shop around before deciding on your own insurance policy

Making a Claim on an insurance policy

What happens if something goes wrong and I need to make a claim?

Always ring your insurer when you make a claim. An insurer can’t help you unless they know something has gone wrong.

Once I have made a claim what will an insurer do?

· Your insurer will assess your property’s damage either by coming to your home to look at the damage or asking you to bring the damaged goods (eg a car) to an assessment centre.

· Assessing the damage allows your insurer to work out whether they need to repair the damage or give you a cash pay-out to allow you to fix the damage or purchase a replacement.

What is an excess?

An excess is the amount you agree to pay when you make an insurance claim.

If you have a smaller insurance premium, you may have a higher excess to pay.

If you have to pay an excess when you make a claim, it may make small claims uneconomic and too costly to bring (e.g. if your home contents policy has an excess of $500 it may not be worth claiming an item that costs $600 to replace, since the insurer would only be contributing $100 and may increase your future premium to reflect the fact a claim was made.)

The Insurer is fixing my house or my car what happens now?

The insurer will provide you with information about how the property will be fixed. If later on, you find other damage you or your insurer didn’t notice which is covered by the insurance claim it is okay to let them know so it can be fixed.

What other types of insurance are available?

Car yards, lenders and insurers sell other insurance known as “add-on” insurance when you purchase a car or a loan.

This insurance includes:

· Consumer Credit Insurance.

· Type and Rim Insurance.

· Loan Protection Insurance.

· Unemployment Insurance.

· Gap Insurance.

When you buy a car or get a loan, you are often not required to buy any of these insurance products.

Before buying any product, it is important you research whether any of these add-ons would actually benefit you. Be careful to check the policy’s exclusions as many consumers who have bought these add-ons have found it hard to make a successful claim.

It is also important to consider:

· Whoever sells you the insurance typically receives high commissions from an insurer when they sell you these policies.

· Do you have to pay an excess when you make a claim?

· Are there any limits to a payout under a successful claim?

· These policies often cost more than you would pay directly through an insurer.

What happens if I don’t have insurance?

If you don’t have insurance and your property gets damaged then an insurer will not fix your damaged property. You will have to find the money to fix the damage.

If somebody else is responsible for the damage caused to you or your property eg in a car accident, then you should make a claim against their insurance policy.

What if I am responsible for a car accident and I do not have comprehensive car insurance or third-party insurance

If you do not have comprehensive car or third-party insurance and you cause damage to another person’s car or a light pole or traffic lights, then you are personally responsible for paying to repair the damage that you have caused. If you do not pay for the damage, then the owners of the property may take you to Court. You should seek legal advice if this happens.

Where can I get help if I have a problem with one of these contracts?

You can get help by calling:

· a financial counsellor on 1800 007 007

· Legal Aid Queensland on 1300 65 11 88

· AFCA on 1800 931 678.

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