What Do You Set Your Excess on Your Home Insurance to Be?

witsa on 24/06/2023 - 17:27

It's currently $1500 for building and $750 for contents for me and the latest renewal the cheapest I can find is about $900 for this.

Is house insurance basically if your house burns down or some other situation that leads to total destruction of your house or are there other situations I might need building insurance?

I'm thinking about increasing it to $5k excess. That would make my insurance about $650. That's about $250 difference - 3500 / 250 (the difference between 5k and 1.5k) = 14

So if my house doesn't burn down in the next 14 years, it seems I would be ahead.

Plus if it does burn down, they're paying like hundreds of thuosands to me anyway - I'm sure a 5k excess isn't going to be that much more of a worry at that time.

Does this sound like logical thinking? What are people's building insurance excess?

Home & Garden Home Insurance Insurance

Comments

  • sumyungguy on 24/06/2023 - 17:36
    +2

    There are possible events other than fire which you'll be self-insuring to $5K: accidental glass breakage, animal damage, burning out of electric motors and power surge, sudden escape of liquid, flood, lightning, storm, damage due to attempted entry, vandalism, etc

    • witsa on 24/06/2023 - 18:29

      That's true. Hadn't thought of those.

      Although, my excess is already 1500 so it would probably already rule using insurance for some of those things

      • freefall101 on 25/06/2023 - 00:05
        +2

        Any kind of structural damage is going to cost over $1.5k pretty easily. Or extensive water damage.

        It's a lot cheaper because damage claims are rarely the entire house is gone. It's more substantial damage. Really the question should be - if you have a big repair bill will paying $5k out of pocket be a big issue?

        • witsa on 25/06/2023 - 18:22

          Well it'll be like paying 1.5k, but a bit worst :P

          I get your point though - for me, it would be a setback for sure but like not going to bankrupt us or anything like that.

          At the moment ill save $250 to increase my excess by $3500. Rationally, sounds like if I think these events have a probability of happening less than once every 14 years I should increase it.

          14 years is pretty long. Even in the last few years, there's been bushfires and hail storms and although we've been unaffected, we could've been unlucky. Think it might be better to just keep it at 1500

    • Euphemistic on 24/06/2023 - 19:42
      +2

      But how often have you actually claimed for any of those items. Paying a bit out of pocket might not be all that bad when you are maki bf saving on the premium.

      • sumyungguy on 24/06/2023 - 19:58
        +1

        In my case only one significant break-in were I got to upgrade all my entertainment electronics and repair the damaged entry points. But plenty of houses in my ‘hood have new roofs and I know some who have suffered water damage from dodgy modern plumbing materials. Insurance is indeed a financial management strategy so each to their own.

        • Euphemistic on 25/06/2023 - 06:30
          +3

          Insurance is indeed a financial management strategy so each to their own.

          Absolutely this. The important thing about having a high excess you need to be able to pay it at short notice.

        • Geoff01 on 25/06/2023 - 08:56

          Yours was predominantly contents not building insurance

      • akunno on 25/06/2023 - 09:04
        +1

        We’ve had two claims in as many years.

        First was power outage for a week - ended up getting reimbursed food and petrol for our generator. Few hundred dollars all up.

        Second was worse - lightning strike on the copper FTTN phone line. Travelled through our modem to all the electricals (AppleTV, computers etc) connected by Ethernet and killed the Ethernet ports. Insurance replaced all items.

        Was great having a lower excess because it meant we could claim, and hasn’t really affected the premium given they’re force majeur.

        • witsa on 25/06/2023 - 09:14

          Was those things part of building or contents insurance?

        • Euphemistic on 25/06/2023 - 09:22

          The fridge full of food for a few hundred $ would have been easily saved with a higher excess and potentially not worth a claim.

          All the electronics is a different story, but depends on the payout figure.

  • Aussiebargainer on 24/06/2023 - 17:47
    +4

    I set my building insurance to $5,000 excess. This reduced the premiums by around $200 per year. If my house is destroyed, I'm more than happy to pay $5,000 to claim.

  • holdenmg on 24/06/2023 - 18:20

    Check the other side of the Coin and make sure your Sum Insured and Contents cover is sufficient.

    No point dropping the excess and saving only to find later your rebuild or contents replacement costs are higher than anticipated.

    • witsa on 24/06/2023 - 18:27

      Absolutely and actually you're probably better off raising your cover to cover the increased excess.

      So say your cover is 800k - increasing it to 803.5k the cost difference is going to be much less than the savings of adjusting your excess.

  • FujiFruit on 24/06/2023 - 20:06

    Good this question came up, i just received my house insurance for renewal. I have mine at $3000 excess for each house and $3000 for contents excess and paying $1350 yearly for house and contents.
    I don't have optional cover such as motor burnout , flood.
    How do you know how much does it cost to rebuild the same house ? Is this a valuation site to go to?

  • HardQuiz on 24/06/2023 - 20:41

    Everything depends on your risk appetite.

  • FujiFruit on 24/06/2023 - 22:35

    I’ve just changed mine to $5000 excess for house and $1000 for contents excess. It’s dropped now
    to $996 yearly .

    • OrangeBJ on 24/06/2023 - 23:34

      would you mind sharing the insurer?

      • AustriaBargain on 25/06/2023 - 00:14

        Add me to your insurance plan too FujiFruit.

        • FujiFruit on 25/06/2023 - 00:26

          Budget direct

  • Ash-Say on 24/06/2023 - 22:38

    Suncorp automatically offers you 25% Safety Net Protection on Classic Extra Cover.

    My building cover is $500k and $60k for contents with motor burnout and accidental damage. Premium is $1600 but the excess is only $300.

    If aomething goes wrong, I dont even need to think about claim due to low excess.

    Choose carefully depending on your situation.

  • thatonethere on 24/06/2023 - 23:59
    +1

    Tbh if you claim a lot as your excess is low eother your budget insurer will drop you (declining your renewal which makes it harder to setup with another provider) or will increase your premium.

  • AustriaBargain on 25/06/2023 - 00:14

    My mother pays $400 excess for contents. Seems a bit much to me for small claims, but better than no insurance if you break your $2,000 phone. Which she's done four times now.

    • ssfps on 25/06/2023 - 06:10

      Contents insurance covers merely breaking your phone? Rather than, say, it being stolen or lost in a fire?

      • Nugs on 25/06/2023 - 06:23
        +1

        It is often an extra, just like excess free windscreen for car insurance
        .

      • AustriaBargain on 25/06/2023 - 12:32
        +1

        It'll even cover your phone being stolen from your car.

  • drewbytes on 25/06/2023 - 07:38

    I set it very high as if I'm going to make a claim it's going to be big $$$. I wouldn't bother claiming for something small(ish) under a few thousand, I'd just pay myself (never had to make a house claim in 25 years of home ownership). So I set the excess high to lower the premium.

  • badg3rz on 25/06/2023 - 08:23

    As I had a hail storm a couple of years ago, the hail put holes in the roof verandah so I claimed it on insurance (building).

    I wouldn't be going to 5k excess, the cheaper excess I think the better, more expensive in the long run but you never know what tomorrow brings.

  • Noblejoker on 25/06/2023 - 09:14
    +8

    I work in the industry and can confirm many people are seeking higher excess to save upfront annual cost
    The budget insurers in particular have pushed this angle of encouraging high excess
    Why do you think that is? Because they are geared to minimal service and they know this will cost them

    In my experience a simple lower excess makes more sense
    For Home and Contents around $500 has been the norm but that is increasing for many to $750 or $1K
    It is fine to say - i can pay for a loss that is $2K or $3K or $4K
    But every time you do you negate the saving on the premium

    Hopefully your home never burns or floods completely - but Insurance is not just for big losses
    The most common claims we pay are for water leakage like a dishwasher Avg $10-20K, storm wind hail damage to building Avg $10-30K, electrical lightning damage Avg $10K
    Can you sort them out yourself, sure
    But is it reassuring to know you can just call and have it sorted for you - absolutely
    Most people have no idea about building repair and do not want the hassle of organising it
    A good insurance companies organises all the repairs with a reputable repairer whilst consulting with you
    This 'repair service' not just the repair itself is what you are paying for

  • md333 on 25/06/2023 - 12:41
    +1

    I work on the same theory, biggest excess they'll let me choose. Happy to pay for the minor stuff myself, and not worried by having to pay the excess in a disaster.
    Depends on having enough money in reserve to pay for what is not covered though, so works best for people who could afford the higher premium anyway.

  • Orgazmo on 25/06/2023 - 13:52

    Some good points being made here.

    Regarding sum insured: It seems to be almost always knock down and rebuild cost only for building cover. Not what the property could be sold for.

    Has anyone found an accurate guide to calculating the correct sum insured amounts?

  • ColtNoir on 25/06/2023 - 19:58
    +1

    Take this with a grain of salt, it’s something I’ve read before but never investigated as I don’t own.
    Sometimes some insurers can make you pay multiple excesses due to some fine print in the policy. So you could end up paying 5, 10, 15k in the process.

    I think the example was flood damage due to a storm, then someone went through and stole and damaged the house before it had been repaired resulting in 2 excess payments.

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