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Comparing Apples And Oranges And Grapefruit


Article on Comparing apples and oranges and grapefruit by adam

Adam Weaver adam@allrisk.com.au
08-04-2018

Comparing oranges with grapefruit

We know that it can be challenging to compare insurance products on anything other than price. People are naturally very poor at assessing risk, and especially so at differentiating the important factors from the fluff. Comparing insurance products is more like comparing oranges with grapefruit - they're basically the same looking, the same shape, they're both citrus fruit, and you could easily mistake one for the other. But one is naturally sweet, and the other is sour.
Luckily, with owner builder construction insurance there's negligible difference between each insurer's core policy. They all cover damage to the project during the construction period, and cover your legal liability to pay compensation for injury or damage to others, caused by the construction project.
The difference is usually in the things you wouldn't think to ask:
  • How long can this insurance last?
  • What happens if I exceed the maximum time length?
  • Does the advice given match what the policy wording says?
  • How experienced is the underwriter with construction insurance?

How long can this insurance last?

Whilst everyone hopes to finish their project on time and under budget, reality is that all it takes is for a couple of tradies to fall behind, or someone getting sick, or running out of money, and the 12-month project can stretch on and on. 
TIP: You need to make sure that your insurance can extend for up to three years; and of course hope that you'll never need it.

What happens if I exceed the time length?

Some insurers offer at most a 12 month policy period, some offer 24 months. Here at Allrisk we regularly get calls from people needing just a few more months cover than they've been given by another insurer. Although we always help, it can be frustrating for the owner builder to have to change insurers during the final project stage.
For our own clients, we have a maximum period of 36 months. And when people need to extend beyond the 36 months, we always try to help find one final extension (and usually have good success).
TIP: Ask what happens if you exceed the time period - will you be left to fend for yourself, or will your insurance company try to help?

Does the advice given match what the policy wording says?

This one might sound a little odd, but we're regularly told that another owner builder insurance provider has told an owner builder that he doesn't need workers compensation because the other provider's policy covers the risk. That's not only misleading, it's patently false - all public liability insurances (including owner builder contract works, home & contents, motor vehicle, and other business liability insurances) contain a firm "workers compensation" exclusion. They actually have to say that to conform with the law. 
TIP: If it sounds too good to be true, it probably is. Check for yourself, ask where in the policy wording the claim is substantiated. It shouldn't be hard, policy wordings are written in plain English. If the wording doesn't say what you're told it says, you might have problems.

How experienced is the underwriter with construction insurance?

Not all insurers deal in construction risk - in fact, the vast majority of insurers you see advertised only deal in home & contents and car insurance, their staff aren't equipped to deal in construction's unique challenges. 
TIP: Ask about the size of the underwriter, and for how long that underwriter has been dealing in construction insurance.

Allrisk credentials

  • We can cover owner builders for up to 36 months.
  • If more time is needed, we'll try to extend your policy one final time (not guaranteed, but we have high success rates).
  • Our policy wordings are available for free download, and we send them to you with each quote.
  • Vero Insurance is part of the Suncorp / GIO / Resilium / AAI group - they're presently the second largest insurer in Australia, and are one of the major construction insurers in Australia.
For more information about Comparing Apples And Oranges And Grapefruit, visit our website.
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