Kevin: I received a really nice e-mail from Christine during the week.
Just to summarize, Christine says she’s now moved into a high-rise apartment in Sydney. She is renting, but she feels there’s a whole load that’s been lifted off her shoulder because she now no longer needs to worry about insurance.
Well, I don’t know about that. I’m going to ask Rob Balanda from MBA Lawyers.
What would be your advice? She’s effectively saying she doesn’t need to take out any content insurance on the unit because she feels so safe.
Rob: Well, the typical scenario is Christine’s probably moved into a new building, maybe on the eighth floor or something like that, and she feels almost bulletproof now.
Short of a visit from the Spiderman, nothing can touch her.
She’s probably thinking,
“Well, to get into the car park you need a security swipe. Following that, to get into the lift you need the same. And when you get onto the floor all the doors are fitted with security deadlocks.”
She probably feels for the first time in her life she doesn’t need insurance.
“I’m free from those insurance companies!”
Kevin: What she points out in the e-mail, too, is that there is adequate insurance taken out by the body corporate and she feels that’s sufficient.
Rob: They’ll have insurance for the building, and they’ll have what’s called public liability insurance.
That’s for slip-and-fall accidents on common property. But no, she needs to think about this. There’s a bit more to this than meets the eye.
Firstly, she’s talking about no insurance at all. She’s talking about going cold turkey, insurance free, without even contents insurance.
So you need to think that through.
You need to understand that it will mean that you’ll have no cover from water damage, say from burst pipes in your unit or from the floor above.
Now, that is the most common claim of all: water damage from over-flowing baths and the like from the unit above.
Kevin: Is that right?
Rob: It’s the most common insurance claim in residential units.
She’ll have no cover, she should understand, for any accidental damage to TV sets or any other contents of her unit while she is living there, or when she’s moving out when she eventually leaves. Of course, she’ll have no cover for fire or if anyone does slip and fall inside her unit.
Kevin: So, the insurance by the body corporate doesn’t cover that?
Rob: It covers public liabilities, slip and fall on common property.
So whilst the risks in life are much reduced as she now lives in a unit, you are not risk free.
Would I feel comfortable or should you feel comfortable, Kevin, in these circumstances not having contents insurance for the unit?
Well, you know what, yes I would. There’s not much in life that is completely risk free, but the risk don’t come much lower than this. I would feel very comfortable without it.
Kevin: So, you’re suggesting to Christine that she doesn’t need to take out any insurance?
Rob: I think she should really consider it. In fact, I live in a high-rise unit myself, and I don’t have contents insurance.
Kevin: But you’re a very cautious person. You’re very careful. I’ve also noticed you’ve never invited me to your place, so I can’t do any damage.
Rob: It’s too small for a party, Kevin.
Kevin: Rob Balanda, thanks for your time. Christine, congratulations on winning that API prize. It’s a great question. I’m sure a lot of people will ask that. Well answered, too, by Rob Balanda from MBA Lawyers. Always, Rob. Thanks for your time.
Rob: Thank you, Kevin.
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