Explaining the new Home & Contents insurance premium Simulator
By Ronen Goldman, Director of Marketing & Customer Relations, Goldfus Insurance
In recent weeks, the Ministry of Finance released a new home and contents insurance premium simulator, known as מחשבון ביטוח דירה. Their recent radio advertisement campaign suggests that the process to receive a quote for home and contents insurance is time consuming and complicated, whereas the internet based simulator can save you time and hassle.
In order to use the simulator successfully, the user must have the details of their property and contents. The main parameters required by the simulator include:
- The type of property eg. Apartment or private house
- The floor the apartment is on
- The value of the general contents
- The value of the property (rebuild value only)
- The age of the property
- The type of cover requested in the event of water damage
- Claims history
The simulator provides comparisons of the premiums between the various insurance companies allowing the user to receive an approximate idea of the costs involved, but significantly, does not make a comparison between the different levels of cover they provide.
While this is a useful tool, there are both pros and cons to using the simulator.
- Certain parameters are not considered which can significantly influence the premium
The simulator provides a simple price comparison between insurance companies for the most basic level of cover. However, the major influences to the premium when looking at a comprehensive policy are the value of possessions such as: jewelry, portable electronic devices, bicycles etc, and these are not considered. The simulator is also lacking any mention of costs for items that the owner may want to have covered on a higher level of All Risk cover outside the home, which is fairly common on home contents policies.
- The simulator relies on estimated values rather than accurate amounts
Each policy is unique and as a result, it is rare that the sums insured will be a round figure according to the estimates provided. Any responsible agent or insurance provider will recommend an appraisal from a regulated company, and will adjust the policy according to the findings. By doing so, a scenario of over and under insurance is avoided.
While the simulator provides brief explanations regarding the various elements of cover, it does not go into detail about the implications of being over or under insured, and does not consider that the homeowner does not necessarily have an accurate understanding of what his or her possessions are worth.
- The user may inadvertently provide inaccurate details
When comparing premiums for structure insurance, the simulator only offers parameters for the rebuild value of the property. In reality, there are two ways to insure your structure: Market Value or Rebuild Value. As the only parameter offered is that of the rebuild value, the simulator may provide an inaccurate quote as users may enter the amount at which they purchased the property rather than the lower amount that it would cost to rebuild.
- Lack of clear explanations
The simulator uses terminology that may cause confusion. For example, cover for water damage is one of the components that is covered by the structure insurance policy. While the simulator takes this into consideration, many users may not understand the differences between using a private plumber, plumber provided by the insurance company or choosing to have no water damage cover at all. For users who are looking to find the cheapest options, they may find themselves with a quote for a less comprehensive, and ill-advised, policy.
- The simulator does not provide a tailor-made policy
While the simulator highlights certain riders that one is able to add to a basic home insurance policy, without adequate knowledge of the various riders, this information will likely be lost on most people and their importance dismissed.
These examples are just a few that outline the potential issues one could face when using the simulator. The main frustration one could face is taking the price comparison provided by the simulator to the insurance company or agent and arguing for a cheaper premium based on the result. After seeing the comparison, the consumer may feel that they are being taken advantage of, but without making a true like for like evaluation of the policy this is not necessarily the case.
The simulator is an important tool as it demonstrates the basic differences between the insurance companies and it provides an initial indication of the type of policy that one can purchase. This can be useful, so long as it is only used as a tool to understand the cost of a basic policy. Nothing can replace the knowledge and expertise of an insurance agent or insurance provider to ensure that one receives a customised and comprehensive policy that will cover all eventualities.
For more information about home and contents insurance contact us today!