Protect your loved ones and loved possessions with home insurance. Compare policies from Australian brands
What is home insurance?
Home insurance is a contract taken out to protect your house and its contents from damage and accidental events such as fire or natural disasters.
It is also known as hazard insurance or homeowner's insurance and it is a form of property insurance that covers private homes . Normally it combines several types of protection, such as the house, the contents, loss of use and liability insurance to cover accidents that happen within the house. Potential damage caused by children or dogs outside the house can also be included as part of the liability insurance section.
Comparison of Home and Contents Insurance Brands
How does home insurance work?
Although home insurance has multiple sections or can be designed as an umbrella policy (or all risks policy), its main coverage is the cost of replacement of the entire building in the event of a fire or other natural disaster.
This cost is called the sum insured and it's very important to determine its correct value. Your insurers will feature calculators on their website to help you determine an accurate value . Be aware that if you overestimate its value, you won't be reimbursed more than the real replacement cost, whereas if you underestimate it, you will be reimbursed proportionally.
As previously mentioned, the contents can be covered under the sum insured, though normally they are included under the contents section of the policy.
Finally, there's the liability that protects your property from damage occurring within the property, even that caused by children or pets outside the house.
Most insurers will also offer optional cover for electric motors, flood, domestic workers' compensation, pet cover and variable excess.Back to top
What are the different types of home insurance?
There are different types of home insurance:
Homeowner insurance can also be divided into three types:
- Home and contents: designed to protect the contents of your building and your building from events such as fire, theft or flood. In the event the policyholder suffers total loss, it can also reimburse for the costs of temporary accommodation
- Contents: protects your contents, personal belongings and valuables from accidental events such as storm, lightning, earthquake, fire, theft and flood.
- Home: protects your home from fire, flood or theft, and in case of total loss or reparations you will be moved to temporary accommodation.
Renter insurance is similar to homeowner insurance, but it is designed for tenants. It does not cover damage to the structure, as this can only be covered by homeowner insurance. There are two types:
- Contents insurance: protects the tenant's contents from events such as theft, fire and flood. You can even protect your belongings outside your home.
- Fire and theft renter insurance: a low cost insurance that covers the tenant's contents and belongings from fire or theft up to $25,000. This is different from the renter contents insurance as it is limited to theft and fire.
Landlord insurance has been designed to protect your rental property and can be divided into:
- Landlord home insurance: protects the landlord's rental property and contents from fire and theft, natural disaster or flood. You can even include what is known as 'Tenant Protection' that covers you against unpaid rents, theft or malicious damage to your rental property by tenants.
- Strata title landlord insurance: covers the contents, fixtures and fittings in the landlord's rental unit or apartment that are not covered by the owner's corporation.Damage caused by fire, theft or flood are included. It is also possible to purchase Tenant Protection insurance.
All of these types of home insurance have the following conditions:
- New for old replacement: structures and contents are replaced by new structures and contents.
- Lifetime guarantee on all authorised reparations.
Steps to choose home insurance
As you have probably realised, there are many components of a home protection policy for applicants to consider prior to application . It is therefore essential to assess your situation and consider the losses that you are exposed to .
Some questions to consider when deciding on a policy and the level of cover to take out include :
- Where do you live? Is it a safe area or is it likely to suffer from natural disasters?
- Are you a landlord or a tenant?
- Do you own the house and do you have children and/or pets?
- Do you have valuables in your house?
Determining an appropriate level of cover is not always easy and the last thing you want is to take out too little or too much cover for your situation. This is where it can be extremely valuable to seek the services of an insurance consultant. A consultant can help you assess your situation and find a suitable policy option.
Once you have found some suitable policy options , it is worth considering :
- What is covered: you should take your time to carefully read all of the conditions of your policy as exclusions may vary greatly between different insurance groups . Normally home insurance does not cover pipes, but does cover damage caused from leakage of faulty pipes. What might be optional coverage for one company might be basic coverage for another. Again, this is where a consultant can offer excellent support.
- The price: Nobody wants to pay too much for cover. Make sure the premium you pay is relative to the cover that is provided. What out for additional fees that you may be required to pay at the start and later stages of the policy.
- Flexibility: You want to ensure you are able to find a policy that provides flexibility in;
- Premium payment
- Adjustment of cover
- Ability to add extra cover
- How easy it is to make claims: It is worth getting a clear understanding of the insurance brands claims process and what action will be required from you in the event that you need to make a claim . Normally, companies require, within a certain number of days (between 3 and 9), the insurance policy number, the address of the insured home and a police incident report number (if applicable). In order to verify the quality of an insurance company, you should check its reputation in your own area.
Benefits and drawbacks of home insurance
- It is flexible and allows you to add extra cover.
- In case of total loss, you can get a temporary house to live in.
- It covers all your personal items and especially all your valuables.
- The old for new replacement condition.
- Not all natural disasters are covered by the insurance companies (such as hurricane, flood and earthquake) or they are covered partially.
- Most brands will require you to pay an excess in the event of a claim.
- You need to accurately calculate the sum insured, or you could get partial compensation, or pay more to get less.
Home insurance traps to avoid
The most important thing to avoid when you purchase home insurance is saving money while avoiding purchasing a low quality policy from a low quality brands . You may save on your premium but may not be covered for certain losses and be forced to pay exorbitant fees in the event of a claim. Always ensure you know exactly what you are covered for and the conditions for benefit payment.
Other things to avoid are:
- Incomplete coverage: you need to correctly estimate all your belongings, valuables, electronics and collectables, and also to include cover for natural disasters if you live in an area where these events happen frequently.
- Leaving your policy as it is: do not forget to update your home insurance if there are any changes. For example, if you've extended or renovated your home, you should increase the sum insured.
Frequently asked questions about home insurance
Some frequently asked questions about home and contents insurance include :
Q. How do I calculate the sum insured?
- A. You may wish to use an online calculator or seek the advice of an insurance consultant to determine an appropriate level of cover.
Q. Is accidental damage covered?
- A. Not automatically, but it can usually be added as an extra option.
Q. Are carpets and blinds insured?
- A. Normally they are, but it is recommended that you check the policy wording.
Q. Are items covered in the contents policy covered away from home?
- A. No, you should buy valuables cover for accidental loss or damage outside your home.
Q/ Is flooding covered?
- A. Flash flooding is but river flooding is not. Again, always best to review your policy to know exactly how you are covered for flood-related losses.
Q. What if I leave my home for a period?
- A. Generally, if you leave your home for more than 60 days, you need to notify your insurer.
Q. I am building a brand new house. When can I insure it?
- A. When the Certificate of Handover is provided by your builder.