Is home insurance worth it?

When you have cover in place to protect the building structure of your property from loss or damage caused by insured events such as storms, floods and fires, you help transfer the risk of a potentially catastrophic financial loss to an insurer. Home insurance generally pays to repair or rebuild your home’s walls and roof, permanent fixtures such as garages, fences and in-ground pools, as well as built-in fixtures and fittings such as solar panels, hot water and air-conditioners. Whether it represents good value will depend on your individual circumstances, including:

• The cost to rebuild your home, which differs from its market value.
• Your location’s exposure to risks such as severe weather, bushfires, floods and theft.
• Your financial ability to cover major repair or rebuilding costs on your own.
• Additional benefits that may be included with some policies, such as legal liability protection, which can help protect you financially if you’re found responsible for injury to another person on your premises.

However, it doesn’t include your personal belongings and contents inside the home such as furniture, appliances and electronics.

Standalone home building insurance is also generally not needed if you’re:

• Renting: Building insurance is generally the landlord’s responsibility, so renters usually only need contents insurance for their belongings.
• Living in strata-titled apartments or units: The body corporate typically insures the building and common property, meaning owners or renters may only need contents insurance.

Contents insurance covers the cost of repairing or replacing your personal belongings inside the property if they’re damaged by an insured event such as fire, theft and flood. This type of insurance is suitable for all types of residents, particularly renters, as they don’t need insurance on the home building they’re renting. It can also be a practical way to help protect yourself from the potentially significant cost of replacing everyday items such as furniture, appliances, electronics, clothing and valuables. In addition, some policies may offer a range of additional benefits/extras such as:

• Temporary accommodation: If a major insured event such as a severe fire or storm makes your home uninhabitable, your policy may cover the cost of temporary accommodation while repairs are carried out.
• Spoiled food cover: You may be reimbursed for groceries and medicines up to your policy sub-limit that spoil due to a power outage or the breakdown of a refrigerator or freezer.

A combined home and contents insurance policy may appeal to homeowners who want comprehensive protection for both the building structure and the contents inside it under a single policy. So by bundling building and contents cover, you get insured for both in a single plan and may benefit from cost savings compared to buying policies separately. You can also opt for optional extras such as accidental damage, portable contents or motor burnout.

However, it’s always worth comparing standalone options and reading your relevant Product Disclosure Statement to understand the inclusions and exclusions of your policy.

Home insurance premiums jumped from $1,940 a year on average in 2020 to $2,938 by October 2025, research quoted from insurance consultancy Finity in February 2026 showed. Darwin was the most pricey capital city at $4,015 and Adelaide the cheapest at $2,042, the research found. Premiums for higher-risk properties can be thousands of dollars more. But there is no standard fixed price because insurers calculate premiums based on factors such as your property’s risk profile, rebuilding costs and the level of cover you choose. As a result, the amount you end up paying depends on a range of factors, including:

• Sum insured: Generally, higher insured amounts result in higher premiums. When deciding on the sum insured amount, consider your expected building costs and the value of your belongings. You can estimate the replacement value with a home and contents replacement cost calculator and then choose your insured amount. If you compare quotes through Compare the Market, our calculator can help you estimate your sum insured amount for free.
• Location of the property: You’ll typically pay higher premiums if your insured address in Australia is in a higher risk location with more claimable events, such as floods, cyclones or theft.
• Level of cover: Buying building and contents cover will usually cost more than a standalone contents insurance policy. You’ll also have to pay more if you choose to add optional extras to your standard policy such as insurance for portable items (e.g. mobile phones and laptops) and accidental damage. The excess you choose can also affect your premium, with lower excesses generally resulting in higher premiums.
• Insurance provider: Different insurers offer different rates and discounts. For example, some insurance companies discount your first year’s premium for a new policy, so it pays to compare.
• How the home is used. Your premiums may be calculated differently depending on how you use your home, such as if you conduct business from your property or rent it out. Standard owner-occupier policies generally may not offer optional cover for tenant-related damage or loss of rent.

Because rebuilding costs, local weather risks and policy inclusions differ from home to home, a great way to estimate your cost is to compare quotes using your address and preferred cover level. If you want an idea of how much your home insurance may cost, you can get a home and contents insurance quote from our comparison service.

You can help lower your home insurance premium by comparing policies, increasing your excess and reviewing how your cover is set up. Changes such as paying annually or improving your home security could also help cut the cost but any savings will depend on your policy and individual circumstances. Some options to consider include:

• Shop around for better deals: Insurance premiums vary significantly between providers, so it pays to compare. Explore different policies and find the one that offers the comprehensive coverage at a lower rate.
• Increase your excess: Opting for a higher excess (the amount you pay out of pocket when you make a claim) can reduce your premium. A Compare the Market analysis found that some insurers provide excess options upwards of $5,000, which could lead to even greater savings. Just ensure you can cover the excess if you need to make a claim.
• Pay annually rather than in monthly instalments, as many insurers include extra costs such as instalment processing fees, which can make the monthly premium expensive in the long run.
• Bundle your policies, such as combining your home and car insurance with the same provider. Many insurers offer discounts to customers who bundle their policies.
• Improve home security: Adding security features such as alarm systems, deadbolts and security cameras can reduce your risk of theft, which, in turn, may lower your insurance premiums. Some insurers offer discounts for homes with improved security measures.
• Review and adjust your coverage: Ensure you aren’t paying for more cover than necessary. For example, if you’ve recently downsized, your home may not need as much insurance as before, although your premium may also change due to other factors at your new address. Regularly reviewing your policy ensures you’re not under or overinsured.

Overinsuring your home means you’re paying higher premiums without receiving any additional benefit. Insurance policies won’t pay more than the cost of rebuilding your home or replacing your belongings, so overestimating your home value will only lead to unnecessarily high premiums without added benefits.

If you underinsure your house, your insurance won’t cover the full cost to rebuild, repair your home or replace your belongings in a disaster. This is particularly risky if rebuilding costs have risen since you took out the policy, leaving you with a significant financial shortfall when you make a claim. Underinsurance can also affect partial loss claims, where you might receive less than you expect due to the extent of any underinsurance.