What to Check Before Switching Insurers

A cheaper insurance quote can look attractive — but it doesn't always mean better value. Here's what to compare before you switch.

A cheaper insurance quote can look attractive, especially when household expenses are increasing. But a lower premium does not necessarily mean you are getting better value.

The new policy may have a higher excess, lower cover limits, more exclusions, fewer extras, different claim conditions, or a different method of valuing your property or vehicle.

Before switching insurers, compare the cover — not just the price.

1. Compare the same type of cover

Start by checking whether both policies cover the same risks.

For home insurance, compare: fire, storm, flood, theft, accidental damage, legal liability, temporary accommodation, emergency repairs, portable valuables, and contents away from home.

For car insurance, compare: damage to your vehicle, damage to other vehicles or property, theft, fire, storm and weather damage, towing, hire car cover, roadside assistance, and personal items inside the vehicle.

A policy that costs less may simply provide less cover.

2. Read the Key Fact Sheet and PDS

Insurance websites often summarise the most attractive features of a policy. The detailed conditions are usually found in the Product Disclosure Statement, commonly called the PDS.

Look for what is covered, what is not covered, conditions that must be met, limits on individual items, claim requirements, how damage is assessed, how the policy can be cancelled, how premiums can change, and any waiting periods or special conditions.

Insurers must provide a Key Fact Sheet for certain insurance policies. The government-prescribed format is designed to help consumers compare policies more easily, while the PDS provides the detailed terms.

3. Check every excess

The excess is the amount you may need to pay when you make a claim. There may be more than one type, including basic excess, age excess, driver excess, unlisted-driver excess, young-driver excess, special excess, natural-disaster excess, glass excess, and theft excess.

A policy with a lower premium may have a higher excess:

Policy B is cheaper to maintain, but it may be more expensive if you need to make a claim. Ask yourself whether you could comfortably pay the excess from your savings.

4. Check exclusions and sub-limits

An exclusion is something the policy does not cover. Common examples may include wear and tear, mechanical failure, poor maintenance, unauthorised or unlicensed drivers, damage caused by alcohol or drugs, flood or storm damage under certain conditions, unlocked doors or windows, certain valuable items, business use, and items above a specified value.

Also check sub-limits. A policy might provide contents cover of $100,000 but limit jewellery, electronics or bicycles to a much smaller amount.

5. Check how your car or property is valued

For comprehensive car insurance, check whether the policy uses agreed value (a fixed amount decided between you and the insurer) or market value (the amount the vehicle would likely have sold for at the time of the accident).

Moneysmart notes that with market value, you do not know exactly how much you will receive if the car is written off or stolen. Agreed-value policies may cost more, but they provide greater certainty about the insured amount.

For home insurance, check whether your sum insured is enough to rebuild the property, including possible demolition, professional fees and changes to building costs.

6. Look beyond the introductory price

A new-customer discount may make the first year appear cheap. Before switching, check the full price after the discount ends, whether the premium can change at renewal, monthly payment fees, policy administration fees, cancellation fees, instalment charges, optional extras already included, and whether the quote is based on accurate information.

Compare the first-year cost and the likely renewal cost.

7. Check the claims process

The value of insurance becomes clear when something goes wrong. Look for how to make a claim, whether claims can be lodged online, whether emergency assistance is available, repairer choice, towing arrangements, temporary accommodation, hire-car conditions, assessment timeframes, and the internal complaints process.

8. Do not leave a gap in cover

Do not cancel your current policy until you have been accepted by the new insurer, confirmed the policy start date, received confirmation of payment, checked the insured property or vehicle details, and confirmed the new policy covers the risks you need.

A small administrative gap could leave you uninsured when you think you are covered.

Insurance switching checklist

The bottom line

The cheapest insurance policy is not always the best-value policy.

A meaningful comparison looks at the premium, excess, exclusions, cover limits, claim conditions and settlement method. A lower price is only useful if the policy still provides the cover you would need after an accident, theft, storm or other insured event.

This article is general information only and is not personal insurance advice. Read the current PDS and consider speaking with a qualified insurance professional if you need help choosing cover.