QLD Can I Request a Home Insurance Premium Reduction?

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Oneman

Well-Known Member
7 September 2017
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Hi.

I have received an insurance premium account and do not wish to insure my house for the same insured value as I have over the previous years. The reason for this is that if the house burnt to the ground or was in some other way totally destroyed, I would not want to rebuild it as big again (it has 5 bedrooms, 2 lounge rooms 3 bathrooms, etc) as I'm the only one living there now. Family has moved out.

Am I obliged to pay the huge premium requested by my home insurance company or can I request to pay a premium based on say half of the insured value of the house? After all, if the house is destroyed, it's my problem isn't it? You can do an 'Agreed Value' policy with a motor vehicle, so can you do the same with a house?

I own the house and land and there are no liens on the property.

Thank you.
 

Rob Legat - SBPL

Lawyer
LawConnect (LawTap) Verified
16 February 2017
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Gold Coast, Queensland
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Technically you could insure it for an agreed value, but you're insuring what is there - not what you would want to replace it with. You might find insurers won't agree to look at it that way.
 

Zerojay

Well-Known Member
12 March 2017
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Most home insurers will allow you to select the sum insured. Be aware that additional policy benefits such as removal of debris and temporary accommodation may be limited to a percentage of the sum insured . So if the sum insured is low you may have insufficient cover for these other expenses.

Also you may find the savings are not as much as you expect. For example halving the sum insured will not halve the premium. This is because both sums insured will fully cover all smaller claims being, by far, the most frequent claims made. Also there are a number of other benefits that are not affected by the sum insured - you get them regardless of the sum insured.

I do not give legal advice, just an opinion based on 20 years experience working for an insurance company.
 
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Oneman

Well-Known Member
7 September 2017
65
4
199
Thanks for your reply Zerojay. Can you give me the name of the insurance company you refer to?

Thanks.
 

Complex16

Well-Known Member
27 July 2016
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The principle of insurance is that you’re entitled to be put back into the same position you were in immediately prior to the loss - no better, no worse.

You can’t ‘half’ insure a home just because your intentions today are to not replace it how it currently is.
 

Oneman

Well-Known Member
7 September 2017
65
4
199
Thank you for your reply Complex16. However, I have made inquiries with a couple of insurance companies who do not have a problem with me insuring the house for a lesser amount as at the end of the day, should it burn to the ground, the insurance company will not be up for the replacement value of the house to its original condition but to a smaller size covered by a lesser premium.

There will be no complaint from me and the insurance company is only paying out to the value of the premium I have paid. As was explained to me, it is the same principle as insuring a motor vehicle for ‘agreed value’. If it is written off in a crash, I am quite entitled to purchase a vehicle of lesser value but am not entitled to pocket the remaining balance of the payout figure.

If the information I have been given and the premium I have paid is in breach of the law then I would assume that the agreement would be null and void and no doubt a legal battle would ensue, perhaps.
 

Clancy

Well-Known Member
6 April 2016
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If it is written off in a crash, I am quite entitled to purchase a vehicle of lesser value but am not entitled to pocket the remaining balance of the payout figure.

What the?

So if you buy a brand new car for $30,000.00, pay the insurance for $30,000.00, it is subsequently stolen and burnt out, then you chose to buy a second hand car for $1000.00 dollars, the insurance company says, oh hey thanks buddy for the free $29000.00 that you paid the premium for, but we will now keep for ourselves simply because you chose to buy a cheap car!