Home insurance stands for general household cover, or ‘bricks and mortar’ cover. While home insurance protects your four walls and roof, it doesn’t cover any related outbuildings, or separate constructions like sheds, garages or patios.
Generally speaking, there are two common types of home insurance in Australia: total replacement cover and the more common sum insured cover.
Total replacement cover compensates you for restoring your property to the condition it was in prior to the event leading to the severe damage or destruction thereof. On the other hand, sum insured cover entitles you to a predetermined compensatory amount required for the repairing or rebuilding of your home.
Additional home insurance policies or extras
Strictly speaking, the following policy extras are not always referred to as ‘home insurance’ – yet they are still important elements you need to take into consideration when buying home insurance. You might find one or several individual policies apply to your circumstances.
We’ve listed some of the most common home insurance extras below:
- Landlord insurance. This popular type of home insurance usually works best for rental/investment property owners as they are automatically subjecting their property to potential risks incurred by tenants.
- Accidental damage. As accidents can happen both inside and outside your home at most unlikely times, make sure you find out how much accidental cover you’re eligible for when you’re comparing home insurance policies.
- Fire insurance. Many Australian residential areas fall into bushfire risk zones, yet household-related fires are just as common as natural ones. Regardless of whether your house is located in a bushfire prone area or not, it is paramount that your home and contents policy includes fire cover, as being underinsured in the event of a fire can leave you in a precarious financial position.
- Motor burnout insurance. This is an optional extra, however it is the one many Australian homeowners neglect to take into consideration. ‘Motor burnout insurance’ is a common term for electrical appliances cover, which may include both whitegoods (washing machines, refrigerators, freezers, air conditioners) and external electrical equipment (heating/cooling units, pool pumps).
- Flood insurance. As with fire insurance, flood cover has utmost importance when your house is located in a flood risk zone – i.e. the area that has a lake, river, creek or other natural watercourse that can potentially inundate your property. It is crucial that you understand flood risk and the types of damage covered.
- Storm damage. While “storm season” beginning in October-November is a longstanding feature of the Australian climate, large sections of our continent’s coastline also fall under cyclone risk. Strong winds, falling trees, lightning and stormwater are common causes of property damage and destruction.
When you’re comparing various home insurance policies and working out the level of additional cover you can get for your property, make sure you consult with the Product Disclosure Document (PDS) of each individual policy before you buy your desired product.