Why you need to check your insurance this Christmas

The middle of your well-earned Christmas break is not the time to be wondering if you have enough insurance cover, and an even worse time to be left out of pocket if something unfortunate does happen.

Money spoke to two insurance experts to get their advice on what you should do to square away your insurance this festive season.

1. Home and contents

Home and contents insurance should not be a set and forget proposition; it needs to be checked and updated periodically.

"People need to make a diary note as an annual reminder to do a pulse check on their insurance policy and make sure they are meeting their changing needs," says Lisa Kable from the Insurance Council of Australia.

"A lot happens in a year, you may have renovated or bought new furniture, and the policy you had may longer meet these new needs. Circumstances change."

Home and contents insurance shouldn't just apply to what's found within the fence line.

Portable contents insurance kicks in as soon as you leave your home.

"There's two ways of getting it. Firstly, it can be included in home and contents insurance, or you can add it to your home and contents insurance."

Check whether the portable contents cover is specified or unspecified, and whether the cap covers the item you want to take.

This is also the time of year homes are threatened and destroyed by natural disasters, which are incurring with increasing frequency.

"It's important for consumers to make sure the insurances they have in place cover them for the natural disasters their properties are exposed to," says Tony Mitchell from Domain Insure.

It's not just about having cover - the level of cover is equally important.

"When people are insuring their homes they need to ensure they're covered for the replacement value of their home."

There are very specific definitions of flood and storm damage. It's not simply a case of whether water has penetrated the home.

"Insurers will cover you for water coming into the house, but consumers need to take on some personal responsibility to, for example, make sure your gutters are clear."

Similarly, homes on the beach that are damaged due to storm surge erosion won't be covered.

Finally, prevention is better than cure.

For instance, all home insurance policies will cover you against bushfire.

"But you need to be aware where you're located, keep gutters clear and trees trimmed, but most importantly you need a fire plan."

"Consumers need to be aware of what exposures they have and what is happening with the environment around them."

2. Travel

Holidays are not the time nor place to be worried about your insurance cover.

As with all insurance, the devil is in the details.

Your holiday should be aligned to your travel insurance policy.

"If you're undertaking adventure sports, check that these activities are covered by your domestic travel insurance policy. Some sports are excluded, or you may need to add cover for a specific sport," says Kable.

Ultimately the only thing you can expect is the unexpected. Holidays are no different.

"Domestic travel insurance does cover you for cancellation, but again, you need to understand which reasons for cancellation are included."

Rental vehicle excess can also be covered for damage to the care and third party personal. Covering the rental car through travel insurance rather than the through the car hire company can save you a pretty penny.

"For a family of four travelling for two weeks, domestic travel cover is about $160, but a rental car excess could be $4000-$6000."

Renting out your property can be a great way to offset the costs of the holiday, but this too needs insurance.

Insurers have caught up to the market and released a shot-stay insurance product.

"Your garden variety home and contents package only covers you and your family. You don't want damage or theft to their property or your property, and you also don't want them to suffer an injury on your property."

The insurance offered by the platforms varies and needs to be read carefully. It may cover certain situations or damage, but not all.

Then there's the matter of caravans.

There are two types of cover here: on the move and on site. A caravan on the move pulling up to caravan parks requires the former while a caravan that remains in the same place with grass growing around the tires requires the latter.

3. Car

The big thing with car insurance is ensuring you have third party property cover.

Compulsory Third Party (CTP) is essential in order to register a vehicle, but it only covers personal injury a crash may inflict on other parties. It doesn't cover damage to another car.

"I can't tell you how many times I've heard young adults say 'I had a crash when I was 18 and am still paying it off'," says Kable.

It's also crucial to get your car insurance sorted before you drive out of the car yard.

"I know someone who drove out the car yard with a new car, t-boned someone and wrote the car off within 50 metres of the car yard. They didn't have insurance and now they're $34,000 in debt with no car to show for it."

At the end of the day, insurance is an exercise in semantics so make sure to read the product disclosure statement carefully. They're not as impenetrable as they used to be. Doing a bit of hard work now could save you heartache down the road.

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