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Adding Up The Costs Of Underinsurance

05.06.2015 By Elliott Insurance Insurance News

Under-insurance is all too common due to people attempting to save money on their premiums or simply being unaware that…

Under-insurance is all too common due to people attempting to save money on their premiums or simply being unaware that they don’t have the right cover in place. This can have a serious impact on your financial situation as you could find yourself hundreds, or even thousands, of dollars out of pocket if something were to go wrong. Not only can under-insurance impact on your own financial situation, it can also impact on the cost of premiums in the community in general.

The Impact of Underinsurance

People in the community are under-insured for a number of reasons. Some may choose this option as a strategy to reduce the short term costs of premiums and will take out the bare minimum cover in order to save some money. However, a lot of people are under-insured without even realising it as they underestimate the financial cost if something were to go wrong.

There would be no point being insured in the first place if you decide to save a bit of money on sub-par insurance that doesn’t cover what you need covering, especially when something goes wrong.
For example, car insurance is an area where some people rely on compulsory third party insurance only. However, the cost and inconvenience that comes if something happens to your vehicle can be considerable. You just need to consider how easily you could afford to buy a replacement car at short notice – for most people, it simply wouldn’t be viable.

Another common area of under insurance is choosing to have minimal cover or no cover at all when it comes to Personal Accident and Injury Insurance which would protect you financially if you were unable to work due to accident or illness. If you stopped and spent some time considering the numerous financial obligations you would be facing without a steady income, such as mortgage repayments and bills, you may realise just how worthwhile it is to have this cover in place.

Underinsurance Impacting On The Community

Under-insurance, or worse still no insurance at all, can have a serious impact on you if you find yourself in a situation where you’re suddenly thousands of dollars out of pocket. However, many people don’t realise that failing to take out insurance can affect the price of premiums in general for everyone. The more people who take out insurance policies, the larger the premium pool is that the insurer has to work with. Therefore, they can pass on savings to the consumer. If more people take out appropriate insurance for their needs, it means that we may see a reduction in premiums for everyone.

Rather than spending time navigating various insurance policies and Product Disclosure Statements to make sure you have the best cover, speak to your insurance broker about your situation. They can look into your various insurance policies and ensure you have the right level of cover in place. Don’t risk leaving yourself open to under-insurance because it can have serious financial implications in the long term.

If you have concerns that you’ve left yourself open to under insurance or for any other questions, contact Elliott Insurance Brokers on 1300 635 315 and we would be happy to assist.