Doubling up on unnecessary insurance can add and hit your hip pocket

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CONSUMERS could be forking out more than needed on unnecessary insurance premiums they may already be covered for.

Depending on what cover you do have, some policies may be costing you hundreds of dollars that would be far more useful in the bank.

For example, if you are a traveller setting off on a festive holiday, you may not need to take out additional rental car insurance often the vehicle will already be covered under travel insurance.

Abigail Koch, from financial comparison website, says it pays to understand your policies and know what you are covered for before taking our a separate insurance arrangement.

Insuring the same risk twice doesnt mean double the benefit or double the payout,’ she said.

The thing which tricks most people out is contribution clauses, which are in most policies.

This means if you take out two insurance policies it might cover the same thing, but contribution clauses mean that if you make a claim and theres two insurers involved in the claim then they only pay a share of the claim.

While its easy to sign up to premiums without going into detail, Koch says consumers must read the fine print to ensure they understand exactly what they are covered for.

Premium costs can also soar when you make a claim come renewal time and excesses are also important to pay attention to because they vary far and wide.

Another example of cover you may already have is a home and contents extras policy, which covers you for personal items up to $10,000 and may mean you dont need comprehensive international travel insurance to safeguard your special possessions.

The Insurance Council of Australias spokesman Campbell Fuller says contribution clauses are taken into account when a policyholder has multiple policies that may have overlaps in cover.

He uses the example of a holder who has travel insurance as well as contents cover to protect for the loss of portable electronics.

Both policies could compensate the policyholder for the theft of a tablet device while travelling domestically,’ he said.

Both policies have contribution clauses, it would be open to the insurers to share the loss, rather than having the person receive two payouts.