Barefoot Investor’s steps to get a better insurance deal

Over a third of insurers increased prices by more than 15 per cent last year. Here’s Barefoot Investor’s step-by-step guide to get a better deal.

Scott Pape is The Barefoot Investor. Picture: Jason Edwards

“Are you okay? If you need a hand with anything, call.”

I stared at the text while I stood ankle-deep in a kiddie pool, orange juice in hand.

I was at a kids’ birthday party. The sender? A farmer who lives 20 clicks from me.

Then Liz came out with her party hat on and said:

“There’s an out-of-control fire near the farm … and the wind is blowing in the wrong direction.”

I nervously sipped my juice while my family gave me my marching orders:

I was told to go home and collect a stuffed cheetah, two teddy bears, and a prized poster of Kysaiah ‘Kozzy’ Pickett. Oh, and the passports. (“Don't’ forget the damn passports!”)

I’ll be honest, as I drove back to the farm I was slightly freaked out.

Still, a lot of people all over Australia have been feeling this way lately: with the cyclone, floods and fires (thankfully the fire near our place was eventually contained). And even if you haven’t – you sure as hell have been burned by your insurer. As one Barefooter wrote to me recently:

“Our home Insurance has tripled – from $400 per month to over $1200. Why is no one talking about this?! You can’t even get a mortgage without having insurance, so there is no way out!”

Sheizenhowzen!

Over a third of insurers have increased prices by more than 15% in the last year (the worst hikers according to CHOICE were Kogan, RAC and Honey).

Now that doesn’t sound too bad right?

Well, hold my OJ:

In a recent ‘shadow shop’, CHOICE found the biggest price difference between identical home and contents insurance policies wasn’t double or even triple … it was TWENTY TIMES.

Blitzenschnauzer!

Okay, so here’s what I want you to do.

First, load up Mr Inbetween on Binge (thank me later), grab your preferred brew, get your phone out of your pocket, and take prime position on the La-Z-Boy. We’re going to do some multi-tasking.

1. Grab your home and contents policy (or just contents if you’re renting) and find your ‘sum insured’ – that’s the total amount you’re covered for. Write it down.

2. Next, google three quotes.

3. Right-yo, it’s time to get off the recliner. Grab your phone and film your place like you’re making a true-crime doco – open cupboards, dig through drawers, and don’t forget the garage. If you ever need to claim, this footage will be worth its weight in gold.

4. Then walk outside and act like a meth-head casing the joint: Do you have a yappy dog? Deadbolts on the door? Security cameras? Note down anything you’ve done to Fort Knox your home.

5. Then call your insurer and follow this script:

You: “Hi, my name is [Your Name] and I’m really struggling to afford my home and contents insurance policy. I’d like to discuss how we can reduce my premium. My policy number is XYZ.”

A house in flood waters near Bendigo in January last year. Picture: David Crosling

Insurer: “I’d be happy to help.”

You: “After a lot of research, I’ve found comparable coverage from other insurers at more competitive rates. Additionally, I’ve implemented several safety measures in my home, such as [consult your meth-head list]. Given these factors, I’m seeking a reassessment of my premium.”

Insurer: “Let me review your policy and see what adjustments we can make.”

Cue condescending loop of a voiceover woman saying “Your call is important to us”.

Insurer: “Thank you for your patience. Based on the information provided, we can offer a premium reduction of [amount].”

You: “I appreciate that. However, considering the competitive quotes I’ve received, plus the safety enhancements I’ve made, I believe there’s room for a more substantial reduction. Additionally, I’m willing to increase my excess, which should further lower my premium by at least an additional 10%.”

Insurer: “I understand. Let me see what more we can do.”

James Blunt’s “You’re Beautiful” plays.

Insurer: “After further review, we can offer an additional discount, bringing your new premium to [new amount].”

You: “Now we’re talking. Send me that in writing and we’re good.”

Insurer: “Done! Anything else?”

You: “Yes, please cancel my auto-renew immediately.”

Insurer: “Are you sure? That’s how we screw you next year.”

In the time it takes you to watch the first episode of Mr Inbetween, you should be able to save yourself hundreds and potentially thousands of dollars.

There’s only one thing left to do. My final instruction is to send me an email at [e-mail] and tell me how much you saved. I’ll report back next week.

Tread Your Own Path!

The Uncomfortable Wife

Hi Scott,

I own my home, have five of my own children still at home, and recently married a second time. My new husband does not want to combine our money or have the same accounts, and he wants to keep everything separate. He has no assets, savings or superannuation. He works on commission, and he is 10 years off retirement age. He contributes here and there, but l feel uncomfortable. Should l get a prenup now?

Felicity

A Binding Financial Agreement can protect your assets.

Hi Felicity,

This ain’t your first rodeo … so why are you acting like a rodeo clown?

You may think this guy is a puny pony, but he is every bit the bucking bronco:

He has no assets, no savings, no super, no reliable income … and no plan.

My worry is that he’s likely to turn around one day and decide to launch you into the cheap seats.

After all, he says he wants to keep money separate – yet he enjoys the use of your assets and doesn’t contribute consistently?

Easy, horsey!

It’s time you pull the reins in on this bloke and lovingly drive your spurs deep into his guts.

Here’s how:

Book in to see a family lawyer today.

Now, you can’t get a prenup after you’re married! So the legal document you need is a Binding Financial Agreement (BFA) – and you should absolutely get one. Also, update your will and estate plan to protect your kids.

Felicity, you do not need permission to protect yourself and your kids. Enjoy the ride.

The Poo Test

Hi Scott,

Thanks for the Swedish Death Cleaning column last week. I suspect this is going to be a repeat in your inbox but here goes anyway: have you heard the new approach to culling?

It’s called the ‘poo test’. You ask yourself: “If this had poo on it, would I wash the poo off to keep it?” If the answer is ‘no’, then donate it or toss it out. I think it resonates well, especially with kids. Keep up your awesome work.

Linda

‘Here’s to doing some Swedish Death Cleaning and then sending all that unwanted clutter to the local opp shop’

Hi Linda,

Actually, my inbox was not inundated with people talking about the ‘poo test’.

In fact, you were the only one.

Look, I love a good decluttering hack as much as the next guy. (You should’ve seen the actual response to Swedish Death Cleaning – my inbox was practically hyperventilating with excitement.)

But your poo test? My kids were even grossed out by this one, and they’re surrounded by sheep poo! Whatever happened to good old-fashioned “Does this spark joy?” or “Would I buy this again today?” I mean, imagine applying this test at Myer:

“Would you like this salad spinner?”

“Hmm … if it had poo on it, would I wash it?”

“Please leave the store.”

Here’s to doing some Swedish Death Cleaning and then sending all that unwanted clutter to the local opp shop – clean.

DISCLAIMER: Information and opinions provided in this column are general in nature and have been prepared for educational purposes only. Always seek personal financial advice tailored to your specific needs before making financial and investment decisions.

Originally published as Barefoot Investor’s steps to get a better insurance deal