Home and contents insurance explained

Home insurance covers the domestic fixtures and permanent structures of your home. For example, it covers your roof, fences and your outbuildings too, like sheds and garages, with some exclusions. Home insurance can protect you for things like fires, floods, storm damage and vandalism related to the physical structure of your house/property. Sometimes flood and other cover may need to be purchased as an optional extras, so check the PDS carefully to see what the policy covers.

Anyone who owns a property should consider home insurance in some form. However, home insurance can differ depending on your home and living situation.

For instance, if you own a home in a strata complex (such as an apartment, unit or townhouse), home insurance is typically provided through your strata levies. Check with your body corporate or strata manager if this is the case when you move in.

If you own a property and rent it out, you’ll want to look into landlord insurance instead. Landlord insurance includes all the benefits of a standard home insurance policy, plus landlord-specific benefits like cover for malicious damage by tenants and loss of rental income due to tenant default. Landlord insurance may also cover furnishings or appliances you provide with the investment property.

If you’re a renter, you don’t need to worry about home insurance – that’s your landlord’s responsibility. However, contents insurance for renters is still important.

Contents insurance covers household and personal items at your insured address, such as electrical appliances, furniture, electronics and jewellery. It’s designed to protect your belongings if they’re damaged, destroyed or stolen. Whether you’re renting or own your home, taking out contents insurance is a wise idea.

The best way to make sure that both your home and belongings are fully protected against damage, loss or theft is to take out home and contents insurance. You can do this through a combined home and contents policy with one provider, or you can shop around and take out separate policies with different insurers. Some providers will offer discounts for those taking out combined policies.

If something went horribly wrong (e.g. a bushfire or another natural disaster) and you needed to rebuild your entire home, would you be able to pay for that out of your own pocket? Likewise, could you replace your valuables and personal belongings if they were stolen or destroyed along with your home?

This is why you should consider purchasing home and contents insurance.

Having home insurance means that the cost of repairing your home is covered up to the sum insured (i.e. the amount you insured it for) if it’s damaged or destroyed by a specific event covered in your policy. Your insurance provider could pay you out or help organise repairs and pay the rebuilding costs directly to the restorers. Either option could provide you with peace of mind during this stressful time.

It’s the same for the contents inside your home. If these are stolen, damaged or destroyed by an insured event, the cost can be covered by contents insurance, sparing you from the cost of replacements or paying for repairs.

Home and contents insurance policies differ between insurance providers, so it’s important to know what each one covers so you can choose the one that’s suited to your situation. Every policy offers something slightly different, so make sure you read the policy details with care.

You can take out home insurance, contents insurance or a combined home and contents insurance policy. The type of policy you choose will depend on your needs and budget.

The level of cover you need will depend on your individual circumstances and budget. These factors will determine your insurance premium.

For home insurance, you should consider insuring the structure and associated outbuildings for the amount required to rebuild all of it if it was completely destroyed. Not doing so could put you at risk of underinsurance, meaning you might not receive the full amount you need to rebuild if you claim.

If you used a home loan to purchase your home, you may be required by your lender to take out home insurance as a condition of your mortgage. This protects the lender if your house is damaged or destroyed.

For contents insurance, you’ll need to think about all the things inside your home and how much they would cost to replace. Again, you don’t want to risk underinsuring your belongings.

Keep in mind that your provider may have per-item limits for each insured category. So, if you have more valuable items like computers, bicycles, antique furniture, art or jewellery, make sure you look at these limits. You may need to take out extra cover for these items (which may come at an additional premium) to make sure they’re adequately covered.

You’ll probably add to your contents as life goes on, or you might want to give your house a facelift with some renovations. If so, make sure you update your home and contents insurance regularly to avoid being underinsured. Underinsuring is a huge risk to your home and your belongings, so it’s a good idea to review your home and contents amounts annually.

On the other hand, if you haven’t updated your policy in a while, you might also be paying too much. For example, installing security systems may help lower your home insurance premiums, while decluttering with a garage sale could help you save on your contents cover.