New research has found that a number of Aussie property owners could have their homes underinsured by up to 66 per cent, opening themselves up to be out of pocket by hundreds of thousands of dollars.
MCG Quantity Surveyors has analysed insurance habits of Aussie home owners, revealing underinsurance is set to cost vast numbers of people devastating financial loss in the event of a claim.
With both bushfires and floods increasingly common throughout Australia, MCG director Marty Sadlier urged home owners to do their due diligence on this front.
“This epidemic of underinsurance could prove totally shattering, and is due almost entirely to the ongoing use of web-based insurance calculators,” Mr Sadlier said.
“Worst of all, these erroneous calculators continue to be recommended by insurance companies and even government departments, despite long-term evidence of their failings.”
Mr Sadlier said not only are the calculators constantly in error, “but these oversimplified tools exclude fundamental components of insurance that amount to thousands more lost dollars”.
“The problem is compounding after decades of being ignored, despite warnings across the insurance and construction industry.”
“... Not only do these calculators tend to underestimate construction costs overall, most don’t include amounts for demolition, debris removal, cost escalations and consultant’s fees.”
“Given the extreme results we’ve observed, any home owner relying on online calculators could be in dire financial straits after a major insurance event.”
To combat this, Mr Sadlier advised home owners to speak to an insurance company or utilise government-approved entities.
“Unfortunately, little has been done to take these calculators to task and, in fact, customers are being increasingly advised to use them by insurance companies and even government departments such as moneysmart.gov.au,” he concluded.