Getting the right cover when looking for a new house insurance policy is very important when you consider the amount of investment you’re trying to protect. Building insurance covers the home building and other permanent structures on your property against insured events, but not your belongings.
More commonly known as home insurance, building insurance can include damage to the walls, roof and floors of your new home, as well as the kitchen and bathroom fixtures and fittings subject to the limits and exclusions of your policy as outlined in the Product Disclosure Statement (PDS). If you took out a loan to build your new home, you might find that building or home insurance is a condition of your mortgage.
Just as important as insuring your newly built home is making sure your belongings are covered, too. Contents insurance can insure against the repair or replacement costs of the furniture, clothing, possessions and décor you bring into your new home.
If your new home is an apartment, townhouse or otherwise part of a larger building or complex, contents insurance may be the only policy you need to take out.
For full coverage, you can have combined building and contents cover on the same policy. A combined home and contents policy insures both the home and your possessions inside it.
During construction, generally the construction company should have insurance for the work they undertake; this should include business insurance for builders and sub-contractors to cover damages if something goes wrong during construction (such as personal indemnity, product liability and personal accident insurance). Make sure to check this with your builders before the work commences.
Once a building reaches the lockup stage, home and contents insurance can then cover your new home even before you move in.
Some specialty insurance providers can offer home building cover for construction projects. However, if you’re building a new home, it’s worth discussing insurance coverage with your builder, lender or a certified financial adviser.
Some lenders may require you to take out a new policy to cover the property you’re buying or building with a home loan. You don’t necessarily need contents cover to secure your loan, but you’ll likely need to insure the building with a home insurance policy.
Should your new home be damaged or destroyed, having cover for repair or rebuild costs could prevent a significant financial loss to both you and your lender.
Most home and contents insurance policies in Australia come with standard exclusions, where your insurance claim may be denied due to the terms and conditions of your policy.
The exact list of exclusions will vary from policy to policy, but some common exclusions are:
Ensure you read the key facts sheet contained within your policy’s PDS so you understand exactly what’s included and excluded from your cover.
The cost of your home and contents insurance will depend on your insurer and level of cover, as well as:
If you want to get a better idea of how much it might cost to insure your home and contents, you can compare quotes from a range of insurers with our free comparison tool.
When deciding on how much to insure your home and contents for, you should first start by estimating how much it would cost to rebuild in today’s economy; one way to do this is by speaking to a professional in property appraisals.
Here are a few factors to take into account:
However, when calculating the value of your home, remember to exclude the land value.
When determining the value of your contents for insurance, it’s important to think about how much it would cost to replace all your possessions and valuable items. This can include clothing, footwear, appliances, furniture, electronics, rugs and curtains, crockery and valuables.
If you’re unsure about how much you should insure your belongings for, start by working out what it would cost to replace all your belongings at their current value. Do an annual inventory of every room in your home and list all the items you have, plus their estimated replacement costs. It’s essential to update the list regularly as you add new items and donate, replace or throw out old ones.
Underinsurance is when you don’t have enough insurance coverage to completely pay for the cost of repairing, replacing or rebuilding your insured home and contents. If your home is damaged or destroyed and you’re underinsured, your insurance payout could be insufficient to compensate for the expenses needed for a rebuild.
This can happen if you set the sum insured too low or it’s been a while since you updated your policy.
If you’ve just bought a new home and plan on turning it into an investment property, you can be covered by home and contents insurance for landlords. Landlord insurance covers the building and its fixtures, as well as benefits specific to landlords (like cover for tenant defaults).
You can also get contents cover if you provide furnishings that can be removed from the home.
Strata property owners typically have to pay body corporate fees, which will usually contribute towards insurance to cover the physical structure of their complex. You may also be able to get building cover for a strata property if you live in a standalone home (e.g. a villa).
However, as a strata resident, you will typically only need to get contents insurance to cover your belongings, whether you own the property or rent it.
Most home and contents insurance policies are based on the sum insured, but you may come across total replacement cover as an option to add to your existing home or landlord insurance policies.
Total replacement cover provides complete financial protection for costs to restore your home to its original condition before the event that caused the damage.
Sum insured cover reimburses you for losses or damages to your home up to a set limit nominated by you (i.e. your sum insured).
It’s important to note that most insurers only offer sum insured cover, so it may be difficult to find total replacement cover. You might want to seek professional advice when calculating your sum insured as building costs are impacted by different factors.
As a home and/or contents insurance policyholder, you can generally choose to pay your premium annually or in monthly instalments. When comparing home and contents insurance quotes through our service, you can select which payment frequency you want and easily switch between options to compare the cost.