We have copied the temporary accommodation wording from three common home policies.
QBE
We will pay the following benefit if your home is damaged by an insured event and it is unliveable as a result.
Unlivable – the home is unliveable if, due to an incident:
• it is unsafe to live in; or
• the disabled access and/or mobility handles and rails required by you and/or your family are damaged to the extent that they are no longer fit for purpose; or
• it is not furnished such that it is comfortably habitable; or
• it does not contain a functioning refrigerator and cooking appliance; or
• it does not have functional bathroom facilities; or
• it is not connected to the electricity supply; or
• it is not connected to hot and cold running water
AAMI
When you are covered for loss or damage to the building to the extent that the building cannot be lived in, we will pay for your reasonable and necessary temporary accommodation costs for the time it will take to repair or rebuild the building so that it can be lived in again for:
Cannot be lived in means destroyed or made completely or partially unfit to live in. This might include if the utilities are not available or it is not safe to live in.
Budget Direct
If your home becomes unliveable as a result of an insured event at the insured address and we agree to pay your claim, we will pay for temporary accommodation.
When a home is so damaged that: l normal domestic activities like cooking and sanitation cannot be performed, or l local authorities will not provide permission for the home to be inhabited, or l we otherwise agree that you can’t live in the home
In each of these policies and generally all domestic home and contents policies, the words unliveable are used and usually defined. Some of the definitions are quite vague and these should be your first reference as to whether you are entitled to temporary accommodation. However, we suggest where any of the below have occurred and still apply to your circumstance then phone your insurer and ask for accommodation.
Remember you must have an accepted claim before temporary accommodation applies.
The house does not have power and it is not expected to be activated for some time (minimum period would be the next day which would result in an overnight stay).
House does not have running water and effective sanitation (use of a bathroom and toilet).
The house does not have an accessible kitchen and you are unable to cook a meal.
The majority of the house is wet.
The majority of the house is fire, smoke or soot affected.
There is a potential asbestos or mould risk.
It is our view that if any of the above are applicable to your claim, then it is reasonable that you be provided temporary accommodation. Be mindful that the amount payable in relation to accommodation is limited as are the time periods.
Common time limits are:
4 weeks for accommodation in a motel style accommodation.
52 weeks (or an extra 48 weeks) for accommodation in a standard that is similar to your home.
We suggest that in the circumstance where you need accommodation, that you find it yourself. Insurers often have limited knowledge of your needs and whilst they may ask how many people need to be accommodated they often neglect things such as where you work, getting home to check the house, where schools are located, where your pets are located.
Find some suitable accommodation and get the property manager to send the insurer a proposal.
Lodging your claim has been made very easy by all insurers these days and can be done via web sites, phone call or email.
Some of the websites are automated and will search for your policy details before your are able to continue with the claim. Others are simply a notification and the insurer will contact you to get details. Emails should be answered the next business day.
But our view is that the best way is by phone. Most insurers have extended office or 24/7 phone contact and by speaking with staff you are able to relay the information they need and have emergency assistance arranged if needed.
Below are some of the more common insurer’s phone numbers
There are over 90 general insurers operating in Australia that provide domestic home and contents policies. It is often the case that insurers have more than one policy and hence there are more than 100 differing policies that you can buy. So it is not possible to summarise the conditions that apply within each different policy.
There is, however, a common thread amongst all of the policies and the below is an overview of a typical home and contents PDS ( product disclosure statement). Remember (we say this a lot), to read your policy document or speak to your insurer if the below worries you.
Your home is covered but the policy goes further and lists the parts of your home that are included.
The policy you bought will cover your home and it will define what is and what is not covered For example, these things are covered:
Floors
Walls
Roof
Windows
Plumbing
Electrics
Cupboards
Toilets, taps etc.
Decks and pergolas
Garden sheds
It is not the intention of an insurer to be sneaky and not cover individual parts of your home. For example you will not find a policy that excludes things such as benchtops or windows and once you have bought a policy you should be comforted that your home is covered.
However, there are some things that insurers do specifically exclude and if you have any of the below, you should phone your insurance company or broker to clarify so you understand and perhaps get cover for them.
Loose gravel or unsealed areas including driveways, terraces etc.
Granny flats if they are separately metered.
Gardens – plants, shrubs, grass and other things that make up your garden.
.
Not all circumstances and damage are covered.
Most home and contents policies are what is called Defined Events cover. That means you are only covered if one of the things described within the policy happens and damage is caused by the event. These things are:
Fire – there must be a flame, scorching or melting due to heat is often not covered.
Water leaks – be careful as often the damage caused by a leaking shower base is often not covered. Also the repair of the thing that leaked is often not covered or the amount you can claim for the repair costs is limited (sometimes as little as $500). You are usually covered for the cost to find the leak but again this cover can be limited to a few hundred dollars.
Storm – the cover provided here is for damage caused by a storm, hail, lightning, cyclone, high winds and other similar weather events. It does not cover a flood, storm surge and often not damage caused by mudslide or erosion unless it can be directly attributable to the storm.
Earthquake damage. Your excess may increase
Impact damage caused by a tree, aerial, car or other things.
Vandalism or a malicious act such as graffiti.
Breaking of glass, ceramic basins, sinks toilets etc. The breakage has to be fully through the glass, not just a scratch or dent.
Theft and the repair of damage caused during a break-in.
Damage caused by a riot or civil disturbance.
The repair of fused electrical motors such as refrigerators and air conditioning units.
Spoilage of food if the spoilage was due to a breakdown of a fridge, power outage etc. The amount payable is often limited.
Damage caused by animals or birds but not an animal that lives with you and not rodents. Possums and wombats are not rodents and the damage they cause is usually covered.
Accidental Damage cover
Most insurers will offer a higher level of cover that is called Accidental Damage Cover. This is where things get a bit complicated but we will try and explain the difference between this level of cover and Defined Events cover.
Defined events – as noted beforehand, this is to cover for the cost of the repair of damage caused by one of the above events – fire, water leak etc. See the list above.
Accidental Damage – gives you cover for an incident that occurs and damage is sustained because of that incident. An event that is unexpected that you did not expect to happen.
You may be thinking that this higher level of cover will ensure every circumstance or incident is covered but there are conditions that apply.
There must be an incident that occurs. For example you trip over and put a hole in the wall, you break roof tiles whilst cleaning gutters. These are incidents that would not be covered under the defined events policy but are covered under the accidental damage policy.
In the circumstance where damage to your home was found but you cannot relate the cause back to an incident or event, insurers may not cover you. There must be a readily identifiable incident that led to damage.
The incident and in fact all events must have happened before the policy expires. That is during the time period the policy is in place, usually a year but stated on your policy document. And don’t worry if you found the damage after you changed insurers, go back and lodge a claim with the old insurer.
All home and contents insurance policies include extra things that you may need under certain circumstances and especially if you have a large amount of damage or your home is destroyed.
These ‘additional benefits’ are in place to assist you in getting back to normal and are often (not always) extra money on top of your sums insured.
Temporary accommodation
Most insurers cover you for the cost of 12 months accommodation in a temporary house or apartment. Be careful though as the amount payable is often limited. Find your own accommodation and get the property manager to send your insurer a letter or email setting out the cost and any conditions.
To qualify for temporary accommodation, your home has to be unlivable and you have to have an accepted claim. The definition of unlivable varies from insurer to insurer but generally means the building is structurally unsound or unhygienic to occupy or there is no power or water available. Bathroom and kitchen facilities are not able to be used.
An accepted claim means you have lodged a claim with your insurer for fire, water leak etc and they have confirmed with you they will pay the claim.
Cover is provided for the period until such time as the house becomes livable. This usually means when all repairs are completed but may also mean when electricity or water is returned. You are best to discuss this with your builder who may not want you back in the house until all repairs are finished and, if so, cover will be for the full repair period up to 12months.
Removal of debris
You are covered for demolition and removal of the debris that occurred during the event. For example, the demolition of fire damaged parts of your home and the removal of the debris to the tip.
A lot of policies pay the cost of this work in addition to the sum insured but be careful not all policies are like this, check your individual PDS and most are limited. It is not unusual for the cost payable under the policy for this work to be limited to 10% of the sums insured.
For example if your building sum insured is $1,000,000 and contents sum insured is $250,000 then the maximum an insurer will pay is $125,000, which is 10% of the addition of both sums insured. Costs can mount up very quickly especially if your home contains any asbestos. If your insurer has not arranged it, ask a builder for a quotation but insist he completes an asbestos test before he gives you the quotation.
Often these costs are hidden within the builder’s repair quotation and if they are, they will be covered as part of your claim.
Extra cost of reinstatement
Lets say your home is destroyed in a fire, there is nothing left. Not a great notion but it will explain this benefit and make it easy to understand.
The house, built in the 1960s would not meet current standards and regulations if built the same as it was. What this covers you for is the upgrade to comply with the current requirements of any statutory authority such as the local council, state or federal government rules, Australian standards and the building codes.
A very common example is the re-build of a property in a rural area. On all such properties the Council will require a Bushfire Attack Level report that classifies your home against the risk of future bushfire damage and describes the upgrades necessary to reduce the risk of fire damage. Such things as fire resistant fly screens and non-combustible exteriors (no timber) are common requirements.
Under this benefit, these costs are covered but again, be careful, they are usually in addition to your sums insured but not always and always there are limits on what is paid. If in doubt, ask your insurer or broker.
Environmental upgrade
This extra amount is only payable when your home is destroyed, a total loss. The amount payable is to enable your new home to have an environmental facility such as a rainwater tank, solar power or hot water system or grey water recycling system. There are many other similar things insurers will cover.
The amount payable is always limited and usually only a small amount such as $5,000. Make sure your insurer includes this in their figures.
Inflation adjustment
This is a difficult concept. If the cost of repairs to your home reaches the sum insured you are entitled to an increase in the sum insured for the period between the previous renewal and the date the damage occurred.
For example, your policy began on 1 January and your home burns down on 1 July. You are entitled to the theoretical increase to your sum insured for the period between 1 January and 1 July.
Still not clear, a number example may help.
Your home sum insured is $1,000,000
The policy began on 1 January
The damage occurs on 1 July
The number of days between 1 January and 1 July is 182 days
The number of days in a year is 365.
The Consumer price index for the same period is 5%
You are entitled to $1,000,000 x 182/365 x 5% = $24,931.50
Apologies it is complicated but make sure there is some amount for Inflation adjustment in your overall settlement figures. Note also, some policies have different calculation systems so the above may not always apply.
There are many other benefits included in policies and often up to 20 different things that can be paid under certain conditions and circumstances. Read your PDS and if you are unsure contact your insurer or broker.
Having your sums insured correct is one of the most contentious areas of insurance.So often we see people suffer a major incident only to find they do not have sufficient cover to rebuild or replace all of their goods.
Recently a family with three children, five people overall, had the trauma of a bushfire and the loss of their home compounded by having only $35,000 in contents cover. This was not enough to even replace their clothing.
A terrible emotional toll can be minimised financially by ensuring your sums insured are correct. In this section of the blog we tell you how to get them right.
Building
There are a number of ways in which you can estimate the cost to rebuild your home and we take you through various options that will ensure you get the figures right.
Builder or Quantity Surveyor
The most accurate way to calculate the cost to rebuild would be to get an actual quote from a builder. You would need to contact a builder who has knowledge of local regulations and standards and ask him to provide a formal quotation.
There is a lot of work involved in quoting to build a house and the builder may want to charge for his time.
A quantity surveyor estimates the cost of construction and many offer the service to calculate your sum insured. They will charge for this service but once completed you will have a formal report that includes the cost to rebuild including any difficulties, Council fees and other items.
Online calculators
There are websites that will do the job for you and we felt one of the best to be via the Insurance Council of Australia website. It transfers you to the Cordell Sum Sure site. To operate the calculator you have to have some basic knowledge of your house but it is easy to operate and seems reasonably accurate.
You do have to put your name and email address into their system to get the calculations and there is a lengthy disclaimer. They email you a report that you can send to your insurer or broker.
Do your own estimate
Unless you work in the building industry and have a good working knowledge of building costs then we suggest you opt for one of the other systems.But should you feel confident in being able to work out the figures yourself below is a list of things that you need to include.
The house
Garage and carport
Pergolas and decks
Garden sheds
Retaining walls
Paved areas including terraces
Granny flat, sleepout or other separate building.
Heating and cooling
Solar systems
Swimming pools and spas
Driveways
Garden edging
Fencing
Built in awnings and shade structures
These are just a few of the items you should include in your calculations of the sum insured.
Also, remember that some policies require you to have demolition, professional fees (surveyors, engineers etc) and other things in your sum insured. You will need to read through the PDS to determine if this is the case for you. For example, some Elders and QBE policies are like this.
Contents
To calculate an accurate sum insured is more difficult and time consuming but again there are various ways in which you can do this or get help.
Manually
This link will send you to a standard form you can use to list all of your contents on a room by rooms basis. Remember to include things in drawers, cupboards and on shelves and be thorough to ensure all items are included.
A typical example for a family room is as follows.
Once you have included all of the items you own, the difficult part starts. You have to now price each of the items on a new basis. That is the retail price you pay at a local or online shop. Even the old table you inherited should be priced on a new for old basis. Try and find the price to buy a similar table online, include GST and remember to include delivery.
Once all rooms have been completed, add up the totals and this becomes your sum insured. I think you will be surprised at how high it is.
Note that your carpet and window treatments are contents.
Online calculator
If the above seems like a lot of work (and it is) you may want to look at getting an estimate from an online contents calculator. Be careful though as the calculators are based on the limited knowledge obtainable for your address that may not be 100% accurate.
Again the contents calculator in the Insurance Council of Australia website seems reasonably good and takes you to suminsured.com.au. The calculator arrives at a sum insured and is editable should you feel it is not very accurate.
We urge caution with this system as it seems to be based on averages for the amount of people living at the property. If you hold expensive or unusual contents, this system would not include the extra expense of replacing these items.
Some policies have limits on the amount you can claim.
Most policies limit the amount you can claim on certain individual contents. This means that should your $25,000 ring be stolen then the amount you can claim will be limited to say $5,000. All policies are different and we advise you to read through and understand what the limits are in the policy you bought.
Typical examples of things that have limits are as follows.
Tools of trade – perhaps you should be thinking about portable tools of trade cover
Office equipment used for a business – you should have business cover
Frozen food and medications
Jewellery and watches
Hand knotted rugs or carpet such as Persian rugs
Memorabilia
Collections such as coin collections, book collections.
Paintings
Works of art including sculptures,ornaments etc
Antiques
Cash
Contents that are outside your house, for example an outdoor dining setting or barbeque
Should you have some of the above items and the cost to replace them (new for old remember) is more than the limit, don’t worry you can always phone or email your insurer and get extra cover for these individual items. They will charge you extra for them but you will be covered for the full cost of replacement. They should also send you an updated policy schedule that lists the extra cover you have taken out, check to ensure it is right.
Some things are not covered.
Most insurers attempt to capture all items that you own that cannot be separately insured but limit or exclude items that can be insured elsewhere. The below is a list of items that are often excluded, again all polices are different and you should read the PDS or phone the insurance company to clarify if this affects you.
Caravans and their contents
Electrical items not able to be used, old TV for example
Uncut gems
Unregistered firearms
Motor vehicles including their accessories
Motor bikes
Trailers
Pets or animals
Plants
Samples, stock or things used as part of your business.
Bank cards, phone cards, tickets, vouchers etc
Finally, we cannot stress enough the importance of getting your sums insured correct. Not doing so is akin to insuring some of your home or its contents yourself. You would not dream of taking out a policy on only the kitchen and living area but excluding the bedrooms and bathrooms but that is really what you are doing by understating your sums insured.
The cost of a policy with $800,000 cover is not much more than one for $600,000 so we urge you to take the time, be thorough, get the advice you need and don’t guess.
If you read the previous posts about the type of cover available and the extra things that are usually included, we now go through circumstances, events and things that are often not covered.
We have made this a simple list that you can check and if in doubt contact your insurer or broker.
Damage to your home caused by the actions of the sea such as a storm surge.
Breaking the law – for example, damage caused whilst you manufacture methamphetamine.
Building extensions – you would expect your builder to cover your home and his building work.
Buildings that are in poor condition. – for example a ceiling is water damaged as your roof has rust holes. The ceiling repairs may not be covered.
Ground movement such as settlement cracks within the house.
Parts of your home that were built in a manner that did not comply with regulations that existed at the time. A typical example is the pergola you built and covered with polycarbonate roofing. If you did not place enough slope on the pergola roof to comply with regulations then the repairs to the pergola may not be covered.
Power surge – damage to your home directly caused by a power surge. Damage by lightning is covered.
Radioactivity
Damage caused during a war
Damage caused by tree or plant roots.
Damage caused by hydrostatic water seepage. This is ground water that seeps through walls and causes damage. Damage caused by a storm is covered.
This is not an exhaustive list and there may be other things in your policy that are exclusions. There are two exclusions that are commonly talked about that are often misunderstood and these are:
Wear and Tear
Defects and poor workmanship
Wear and Tear
Often insurers will decline a claim on the basis of wear and tear. What does this mean and do they have the right to do so?
Wear and tear is defined as the damage that happens to an object in ordinary use during a period of time. A typical and often seen example is the bedding and pointing to the ridge tiles of your roof. It deteriorates over time and may lead to tiles or pieces of mortar falling from your roof. The repair of the bedding and pointing in this circumstance would not be covered and insurers would expect you to maintain your home by paying to have the work done at your expense.
Another common example is carpet that wears out over time under normal usage and foot traffic. Insurers will not pay to replace carpet that is simply worn out.
Defects and Poor workmanship
If your home has defects or areas that are poorly built then cover is not provided for the defect or area that was poorly built.
This can be very distressing if the insurer has given the go ahead to a builder who then encounters a defect that needs to be fixed. The builder may agree to fix the problem but it will be at your cost. At that time, you are locked into a contract with a builder who may over charge to correct the defect.
A typical example is where a leak was found in the bathroom and during the course of repairs the builder finds damage caused by a leaking shower base as the shower is not waterproofed properly.
It is our suggestion that where such a defect is known or suspected that you ask the builder for a quotation to correct the defect before they start or ask the insurer to simply pay the repair costs (cash settle) and manage the repairs yourself. In the above example, the builder will most likely know if the shower is water tight (or you can ask him to check it), so you should discuss the shower with him and get him to quote the shower repair before starting.
Remember it is your home and the builder or insurer should not impose repairs or replacements on you that you are not comfortable with. If it is in your best interest to be paid out then phone and explain this to your insurer, who we are certain will act to assist you.
