A survey by Compare the Market Australia has revealed that many Australians may not have up-to-date contents insurance, potentially leaving them vulnerable to underinsurance.
The study, which surveyed over 3,000 people across Australia, the US, and Canada, examined the state of household insurance coverage and understanding among consumers.
The national median value of contents insurance cover in Australia was reported to be $50,000. However, Tasmanian households stood out with a much higher median valuation of $120,000.
The findings indicated that older Australians are more likely to update their contents insurance policies compared to younger individuals, suggesting a generational gap in insurance behaviour.
Among the surveyed nations, Australians demonstrated the highest level of awareness about their contents insurance policies and coverage.
However, young Australians were the least likely to have either home or contents insurance. By contrast, Australians aged 58 and over were 20% more likely to hold some form of insurance cover.
Adrian Taylor, Compare the Market’s executive general manager of general insurance, emphasised the need for homeowners and renters to ensure their contents are adequately covered.
“It’s good to see that the majority of those surveyed have some form of home or contents insurance,” he said. “Contents insurance can provide homeowners and tenants peace of mind.”
However, he emphasised the importance of accurately assessing the value of belongings to avoid the risk of underinsurance, which can leave homeowners short in the event of a claim.
Taylor also urged Australians to review their home buildings insurance policies to account for rising rebuilding costs and to consult the Product Disclosure Statement (PDS) and Target Market Determination (TMD) for policy details, including coverage limits and exclusions.
“Underinsuring your belongings could result in your insurance payout being less than the loss you suffered. The same goes for anyone taking out home buildings insurance. It is important to ensure you have an understanding of rebuilding cost in order to stay properly covered,” he said.
Separate findings by Compare the Market identified underinsurance as a significant concern for Australian homeowners.
According to the 2024 report, 32.8% of surveyed homeowners relied on estimates rather than calculating the actual replacement costs of their possessions when arranging their contents insurance. This practice, while common, increases the risk of coverage falling short during a claim, particularly as construction and replacement costs continue to rise.
Natural disasters and other significant events may exacerbate these risks if policies are not updated regularly to reflect current values.