Policyholders will receive a new home if their property is damaged beyond repair under a home cover product being piloted in Queensland.
Insurance Australia Group’s (IAG) product InsureLite provides policyholders with a new home built to the value of a pre-selected option of either $150,000 or $200,000, or an equivalent lump-sum payment, if their home is destroyed.
Policyholders are required to preselect a minimum damage threshold of either $5000 or $10,000, with the cost of damage required to reach the threshold before they can make a claim.
The product aims to provide a cheap alternative to traditional home building insurance, as it does not require an excess payment.
IAG General Manager of Venturing Ron Arnold says that the new product offers non-insured Australian households easier access to the necessary protection of insurance.
“InsureLite is one option for households finding the cost of building insurance prohibitive, but other solutions need to be explored so that all Australians are protected,” Arnold says.
“Insurance affordability is a complex problem and we welcome feedback from the community on InsureLite as the trial progresses.”
NIBA CEO Dallas Booth has offered warning regarding the new product, saying that the insurer is obliged to ensure that consumers are well informed so as to avoid underinsurance.
“If an insurer is selling a product that doesn’t match the usual expectations of the community they are legally obliged to inform consumers about the differences,” Booth says.
“The key point is whether they meet those compliance requirements with a 90-page PDS that no-one reads or actually make sure the new product is properly understood by consumers.”
The product will be trialled in Queensland before potentially being extended into other states and territories.