How to compare policies to get the right coverage to suit your needs

By AAMI 24 July 2023

When comparing insurance policies to find the right price and cover, there are a few things to keep in mind. Make sure that the policies you compare actually reflect what you’re looking to be covered for, and that you aren’t risking underinsurance.

Why you may not want to use comparison sites

Comparison sites can offer a high-level summary of how policies appear at first glance, but some may not provide the depth of understanding that researching them yourself can provide.

They may not list all the options available – which can include optional covers that are cheaper for you.
They may be owned by companies with interests in selling their own products.
They may receive commissions on the links to the products they recommend, which can impact their impartiality.

When comparing policies yourself, you can focus on the specific providers that interest you, and tweak your quote to reflect your needs accurately and clearly, and see how it compares across providers. That way, you can get a more comprehensive understanding of your options and how they might address your needs.

That doesn’t mean you should avoid comparison sites 100% of the time – as we said, they are great for providing a top-level comparison of the basics. But for comparing the details, consider researching it yourself – which means digging into the relevant Product Disclosure Statement.

Explore AAMI Home Insurance

Compare like-for-like

It’s no use comparing a policy with all the bells and whistles to one that’s bare bones – one will obviously cost more than the other, if it offers more cover.

Compare like-for-like by making sure the details you enter are the same from quote to quote. That’s things like:

the excess
the building sum insured or if the policy offers Complete Replacement Cover*
the contents sum insured, and
any optional extras, if they’re offered by all the insurers you’re comparing.

Know what’s included and what’s optional

Not all policies are created equal. What may be included with one insurer’s policy may be listed as an optional extra for another, and this can make comparing a bit tricky. Make sure you’re aware of what is counted as an optional extra or an automatic inclusion, and what may not be included at all.

For example, AAMI has motor burnout cover automatically included in our Home Insurance policy. This covers the reasonable costs of repairing or replacing electric motors in household equipment or appliances which are part of the building that have fused or burned out and where that motor is less than seven years old. Other insurers may offer motor burnout as an optional cover in exchange for paying extra on your premium instead.

Another example is Flood cover, which is included automatically with AAMI Home Insurance policies, with the choice to remove it for a small number of high-risk addresses. Some other insurers may offer Flood cover as an optional extra to opt into by paying extra on your premium instead. Knowing what is and isn’t included is especially important for something like Flood cover, so hopefully this highlights the benefits of reading your policy documents!

By taking the time to do your research, you can better understand your options and may save on your premium.

Explore AAMI Contents Insurance

Common mistakes to avoid

Basing decisions on price alone

Choosing a policy based on price alone can lead to headaches at claims time. You may want to consider a few more key factors, like:

the company’s reputation
the percentage of claims that are paid out, and
the customer experience, from updating your policy to claiming.

There may be other factors that are important to you and your needs, too.

Underinsuring yourself

Going for the cheapest possible cover may run the risk of underinsurance – this is when the amount you have insured your building and contents for isn’t enough to cover the full cost of rebuilding, repairing or replacing your home and its contents, following a claim.

These out-of-pocket costs can really break the bank, so it’s up to you to carefully consider your needs and budget, and decide on a level of risk you’re comfortable with before choosing your cover. AAMI’s Home Building and Contents Calculators can help estimate how much you would need to rebuild your home from scratch or replace all your contents.

*With AAMI, if you have selected the optional Complete Replacement Cover with your Home Building Insurance policy, and if your home needs to be repaired or rebuilt after an insured event, we will offer to repair or rebuild your home as it was, or pay you the amount of the assessed quote to repair or rebuild it – without you having to set a specific building sum insured. Learn more.

Insurance is issued by AAI Limited ABN 48 005 297 807 AFSL 230859 (AAI) trading as AAMI. Read the relevant Product Disclosure Statement before buying this insurance. The Target Market Determination is also available.
This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it.