ASIC home insurance report

ASIC has released a report on ‘Making home insurance better’, which advises customers (particularly people who live in high-risk areas) to review their home building insurance cover, shop around and compare insurers’ different policies.

The report coincides with a spike in home building approvals (private housing rose 3.1% in November, according to ABS figures) and identified an average 4% increase in building costs nationally – higher than the CPI.

ASIC has identified that homeowners affected by the Canberra bushfires (2003) were underinsured by 27-40% on average and, more recently, that homeowners affected by Tropical Cyclone Larry in Queensland (2006) were underinsured by an estimated
50%. It estimated that building costs increased by 50% immediately after
Tropical Cyclone Larry.

According to a previous report by ASIC, 70% of Australian homes are underinsured against complete replacement in the event of their total loss or destruction. This means that, faced with the complete destruction of their home, most Australians would be out-of-pocket, in order to have their homes rebuilt to their former status.