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How does where you live affect your home insurance premiums?

Location is more important than you may think when it comes to home insurance.

The location of your home can have a definite impact the cost of your home insurance. Insurers take into account an area's crime rate as well as its susceptibility to bushfires and storm damage when assessing the likelihood of a claim.

Crime and home insurance

Insurers will typically break crime down into separate categories such as theft, malicious acts and riot or civil commotion. It’s worth looking for all of these separately in your policy.

  • Usually defined as: Malicious acts usually covers vandalism and deliberate property damage. Theft covers the value of stolen possessions and break-in damage. Riot and civil commotion can cover damage caused by both activists and authorities.
  • Does not include: Deliberate damage by someone living at your address, accidental damage or belongings stolen from an unsecured property.
  • What to look for: How and when the policy will pay out for damage caused by other people and any conditions around home security.
  • High-risk areas: Locations with a higher crime rate are more at risk.

Impact

This refers to damage to your home or belongings caused by an impact. This might include a car crashing through your wall, a tree or branch falling on your roof, falling parts of an aircraft or spacecraft or debris blown by the wind. Often this category will also include damage caused by animals.

  • Usually defined as: Damage caused by something colliding with your house or belongings.
  • Does not include: Damage that is better claimed against other sections of the policy. A brick thrown through your window, for example, is more likely to be claimed against the malicious damage section of your policy. In the case of cover for damage caused by animals, it typically doesn’t cover damage by pets or other non-pest animals knowingly kept on the property.
  • What to look for: The conditions under which you will not be able to make an impact damage claim and precisely what types of impact are covered.
  • High-risk areas: The risk levels are very specific to you. Determine your risk by looking at the exact impact cover offered by a policy and considering how likely each event is to happen to you.

Crime rates around Australia

It’s worth doing your homework on crime rates around Australia, and you may even want to use this information to rule out some areas in particular. You can find out the crime rates in your area using the tools below. For a clear idea of how this will affect your insurance premiums, you might want to look at the rates of property crime.

Other risk factors you should be aware of

When looking for a home insurance policy, there are numerous factors you should consider when looking at individual dangers. You need to be aware of how the insurance company defines these dangers and what the company excludes.

Flooding

Flooding is one of the more contentious issues in home insurance policies and its the source of numerous complaints. Many people assume that flood cover will pay for all types of flood damage, when in actual fact certain types of damage, such as that caused by ocean flooding or related to storms, may not be covered.

  • Usually defined as: When water covers an area that is usually dry land.
  • Does not include: Flooding caused by burst pipes or leakages.
  • What to look for: Check whether your policy covers tsunamis, storm surges and other types of ocean flooding as well as river flooding. Look for cover usually called “actions of the sea” to check how the policy covers ocean flooding.
  • High-risk areas: Areas near the coast, near rivers or in low-lying regions are at the highest risk, but almost any area may be subject to flooding. Homes on hills are naturally at a lower risk.

Fire

Fire cover specifically requires there to be a flame. It does not typically include heat damage without a fire, scorch-marks where there were no actual flame, smoke damage or melting.

  • Usually defined as: Damage caused by a fire where there were actual flames.
  • Does not include: Burns, scorch marks, smoke damage and melting where there were no flames. Will typically not include arson or damage resulting from controlled back-burning.
  • What to look for: Conditions regarding details such as where the fire originated. For example, some policies will cover smoke damage if it was the result of fire on a neighbour’s property or a bushfire, but might not cover it in other circumstances.
  • High-risk areas: Most places in Australia are potentially at risk of fire, though homes at the tops of hills and surrounded by bushland are more at risk. The danger is greatest when the weather is hot, dry and windy and in areas where this type of weather often occurs.

Storms

Storm damage refers to the destructive weather that accompanies storms. Depending on the policy and the insurer, you might need to claim certain types of storm damage, such as flooding caused by heavy rain, under other sections of the policy.

  • Usually defined as: Damage caused by storms including cyclones, rain, hail, snow and wind.
  • Does not include: Damage that is more accurately claimed under a different section of the policy.
  • What to look for: Damage that is not counted as storm damage. Flooding caused by heavy rain and damage caused by wind-blown debris will often need to be claimed under flooding and impact damage respectively.
  • High-risk areas: All areas are at risk of storms, but particularly tropical and coastal regions.

Earthquakes

To qualify as an earthquake, it needs to be a distinct, recorded seismic event. Generally, you won’t be able to claim separately for damage caused by aftershocks shortly after the main quake. You also might need to claim certain types of damage caused by the earthquake, such as a fire, against other sections of the policy.

  • Usually defined as: A recorded seismic event that was officially determined to be an earthquake.
  • Does not include: Damage caused by the earthquake that is more aptly claimed under a different section of the policy.
  • What to look for: How the insurer defines separate earthquakes and what types of damage may need to be claimed against other parts of the policy.
  • High-risk areas: Western Australia has more quakes than all the other states and territories combined and Adelaide has more than any other capital city. The overall risk in Australia is low.

Lightning

Generally, this type of cover is for damage specifically caused by direct lighting strikes to your home. If it starts a fire, then you would need to claim the fire damage under the fire section of the policy. In many cases, storm cover will specifically not include damage caused by lightning.

  • Usually defined as: Damaged caused by lightning directly striking your property.
  • Does not include: Other types of weather damage. It will typically not include damage indirectly caused by lightning or claimable against other parts of the policy, such as electric motor burnout.
  • What to look for: Exactly what is included in the insurer’s definition of lightning damage.
  • High-risk areas: All structures are at some risk of lightning damage. Taller buildings, especially structures with spires or copper roofing features, may be particularly at risk.

Knowing how to assess risk levels can help you make sure you’re finding the right type of home and contents insurance and that you aren’t paying too much for it.

These are just the risk factors. You will also need to know what terms and conditions to look for in a home insurance policy before getting quotes and comparing your options.

Compare your home insurance options

Details Features
Home & Contents Insurance
Home & Contents Insurance
Save 30% when you purchase cover online
  • 24/7 Phone & online claims service
  • Covers the cost of rebuilding or repairing your home
  • Covers in-home contents and contents away from address
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Comprehensive Building and Contents
Comprehensive Building and Contents
Save up to 30% when you purchase a combined Woolworths Home and Contents policy online. Cover must be purchased prior to 31st October.
  • $8,000 cover for outdoor contents
  • $10,000 cover for home office contents
  • Accidental damage cover
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Home and Contents Insurance
Home and Contents Insurance
Buy online and save up to 10% on your policy.
  • Cover for legal liability
  • Protect your contents and possessions
  • Cover against theft, storm and rainwater, fire and more
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Home and Contents
Home and Contents
Save 30% and new eligible customers can receive 5,000 Velocity Frequent Flyer Points when you purchase online before 31 December 2017
  • Up to $20 million legal liability cover
  • 21 day money back guarantee if a claim has not been made
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Home and Contents Insurance
Home and Contents Insurance
Save up to 30% when you purchase cover online
  • Up to $20 million legal liability cover
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  • Optional 25% safeguard if sum-insured not sufficient
  • Optional flood cover
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Building and Contents Insurance
Building and Contents Insurance
24/7 emergency claims assistance so you’re never left in the dark.
  • Cover for loss or damage by theft, attempted theft
  • Cover for damage from accidental fire
  • Optional burnout of electric motors
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Andrew Munro

Andrew writes for finder.com.au, comparing products, writing guides, sniffing out deals and looking for new ways to help people get the most out of their money.

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