Because we have more than forty years involvement with insurance valuations and the insurance industry, people frequently ask us where they can source the best home and contents insurance for their properties. Like most questions related to finance and property, there isn’t a simple answer.
Underwriters and what they do
From the point of view of the average property owner, the insurance industry can be seen as a two-layered enterprise. Sitting at the top are the underwriters. These companies issue the policies and evaluate the risk associated with the property you wish to cover. They also set the price that is paid annually to insure the property (referred to as the premium). The policy is extremely important because it sets out which items and under which circumstances the underwriter will cover you in the event of a fire, flood, earthquake, etc.
Not all policies will cover the same items. The details of individual policies change periodically and to complicate things even further, they can vary widely in price. The end result of this labyrinth of information is to make comparisons between policies and the cost of the cover you are receiving difficult.
Insurance brokers and how they operate
Not surprisingly, a specialist group of professionals has evolved to assist property owners to sort out the best policy fit for their particular needs. This specialist group constitutes the second layer of the insurance industry and they are known as insurance brokers. All insurance brokers are required to be licensed by the Australian Security and Investments Commission (ASIC). This is important because it ensures that your insurance broker is genuinely working in your interests to secure the best policy for the best price from competing underwriters.
Insurance brokers do not charge you a fee for their services. Their fee is paid by the underwriter and is included in the premium you pay for the insurance cover. It is referred to as a commission. When you approach an insurance broker to arrange cover for your property, they will typically seek proposals from three (3) underwriters who offer the policy coverage that best fits your needs. Where there are differences, the broker will explain these to you.
The cost of insurance cover
The cost of the cover can vary considerably depending on what exclusions and inclusions are made by the individual underwriters and the amount of excess you have to pay in the event of a claim. Excess is the amount you agree to contribute towards the cost of a claim. Most policies have an excess provision. It serves to limit the number of claims likely to be made against the policy by the insured and it limits the exposure to cost by the underwriter. Generally a higher excess is accompanied by a lower premium, however this is not always the case.
Where to find a good broker
So where can you find a good insurance broker? The largest general insurance broker network in Australia is The Steadfast Group with over 360 offices around the country.
Our company has a long-standing relationship with the Steadfast brokers and we have always found them to be honest and reliable. You can find a broker near your home or property by visiting their home page https://www.steadfast.com.au/.