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What exactly is home and contents insurance?

Your home is likely to be the most expensive thing you own. If it gets damaged by a falling tree, burst pipes or a storm, you'll be patting yourself on the back for organising home insurance. Here's a quick breakdown of what you get:

• The ability to rebuild. If an unexpected disaster strikes, you'll be able to repair or rebuild from scratch.
• Protection of your possessions. Whether it's family heirlooms, your cosy sofa or even your Xbox, the contents of your home aren't just stuff. With contents insurance, you can repair or replace your possessions if they're damaged by fire, storm, theft or other insured events.
• To meet your obligations. If you take out a mortgage to buy a home, it's a condition of your loan contract to take out home insurance – the lender wants to be sure your property is protected if something happens.
• Peace of mind. With the right policy in place, you can rest assured you'll have the financial support you need if something major happens to your home or its contents.

The types of home insurance you can compare

Home and contents insurance

This is combined insurance that covers your house and your possessions within it (most of the options in the table above are home and contents policies). It'll cover the cost of repairing or rebuilding your home if it's damaged from an insurable event, like a storm. I it also covers your possessions – furniture, electronics, carpets, curtains and clothing – from loss, damage and theft. You can also pay for extra cover for items you take outside of the house (like electronics or jewellery).

Contents insurance

Contents insurance covers just your possessions in the home. This includes jewellery, electronics, carpets, curtains, furniture, appliances and furnishings. This is a great option for renters or those homeowners who live in an apartment.

Building insurance

This is stand-alone cover for only your home. It also covers other fixtures on your property, such as garages, fences, and sheds. It protects you against a bunch of natural events, such as fire, storm damage and (depending on the policy) floods.

Landlords insurance

Landlord insurance protects your home against theft, malicious damage, loss of rent, as well as natural events like storms, flood and fire. It's a smart idea if you're renting your home out to strangers.

Strata insurance

When you live in a group living setting, like a block of apartments, you need cover for the building and common property like lifts, pools, car parks, gardens, balconies, driveways and even walls.

What does home insurance cover?

FiresFor example, a fire or bushfire destroys your home. Only some policies cover accidental fires.

StormsFor example, if wind from a storm damages your roof.

TheftFor example, replacing locks and stolen items after a break-in.

ImpactFor example, if a tree falls and damages part of your home.

LeaksFor example, if a pipe bursts and ruins your floors.

• See a full list of what home insurance covers

  Here's a full list of things that most home insurance policies will cover.

  Is this covered?	Home and contents insurance	Building insurance	Contents insurance
  Storm and rainwater damage
  Escape of liquid, such as a burst pipe
  Fire damage
  Theft and attempted theft
  Malicious damage and vandalism
  Breakage of glass, ceramics and sanitary fixtures
  Explosions
  Impact damage, such as a fallen tree
  Lightning strikes
  Temporary accommodation
  Flood	Optional with some policies	Optional with some policies	Optional with some policies
  Earthquake or tsunami
  Accidental damage	Optional with some policies	Optional with some policies	Optional with some policies
  Portable contents	Optional with some policies	Optional with some policies	Optional with some policies
  Motor burnout
  Deliberate or negligent damage
  General wear and tear
  Asbestos
  Mould, termites or vermin
  Damage from renovations
  If your home is unoccupied	Optional with some policies	Optional with some policies	Optional with some policies

How to actually insure your house

Step 1:
Evaluate how much your home and possessions are worth. When you take out home insurance, you give a dollar value to your insurer for how much your home is worth. The cost of home insurance for you will depend on this figure. Insure your house for too little and you risk being underinsured and out of pocket come claim time. Overinsure your house and you'll pay higher premiums.

Step 2:
Determine what kind of cover you need. Do you want to cover your home and everything in it? Then opt for home & contents insurance. Only want to cover your contents? Just your building? Figure out what kind of things you want to cover and find the policy that fits those needs. For example, a policy that offers total replacement cover might cost more but will also ensure you won't be underinsured. You'll also pay more if you want to get covered for accidental damage, but if you've got toddlers running around this is a no-brainer and could save you more cash in the long run.

Step 3: Compare insurers.
Once you've figured out how much your home and contents is worth and you know what policy you're after, start comparing insurers. Be sure to look at what the policy features as well as price.

How can I save on my home insurance?

Don't just renew

Global warming is to blame for a lot. It's also a major reason home insurance costs are rising. You don't need to just accept the price increase though. When your renewal comes up, shop around. You'll likely find somewhere cheaper.

Take advantage of sign-up discounts

Home insurers like to offer sign-up discounts to get you on board. Some can genuinely save you a lot of money, like 30% off your first year. If you want to continue saving though, keep switching every 12 months because insurers often increase existing customers' prices significantly.

Install home security

Insurers like safe homes, so make yours like Fort Knox (internal alarms, external sirens or external strobe lights will suffice) and some will charge you less.

Increase your excess

This is a specified amount you need to pay whenever you make a claim. All home insurance policies have them. Most will let you increase your excess in return for cheaper premiums. There's a downside though – making a smaller-value claim won't be worth it.

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How Donna and Kevin saved by switching

"When my husband and I turned 60 and became semi-retired we wanted to put a stop to unnecessary purchases/bills so we could spend time enjoying our retirement. When we received our insurance renewal (from a company we'd been with for over 5 years), I was blown away to learn not only were they increasing my premium by 60%, but when I compared their basic cover against Honey Insurance's cover (with added benefits) I was saving over $700 a year!"

Donna and Kevin Field

NSW-based homeowners

FAQs

• Do I need home and contents insurance?

  Some mortgage lenders will require you to have home insurance when you buy a home to ensure that they get paid, even in the event of a disaster. Outside of this though, there's no legal requirement to have home insurance, it's just wise. It's probably your biggest asset. If you can't afford to lose it, insure it.

• How much does home insurance cost?

  Our latest research from November 2024 shows that the average home and contents insurance policy costs around $2,800. Of course, your own quote will differ as it's heavily dependent on the rebuild cost of your home and the value of your contents.

• Do I need home and contents insurance if I rent?

  If you rent, you should consider contents insurance only, you won't need building insurance (that's your landlord's job). Contents insurance can protect your belongings so it's worth considering if you have anything of particular value.

• Do I need home insurance if I live in an apartment?

  You shouldn't need home (building) insurance because your strata fees will cover that but you may like to consider contents insurance to protect your belongings.

• How do I calculate how much home insurance I need?

  For building insurance, you'll need to know a rough estimate of what it'd cost to rebuild your home. This is not the value of your home as that's different and depends on the housing market. This is the cost of materials and labour to rebuild your home. Unfortunately, there's no real way to calculate this with certainty. It could help to look at home building costs for similar properties in your area.

  Additionally, if you're getting contents insurance then you'll need to know the value of the items you're insuring so you can ensure your sum insured is enough.

• Is flooding covered by home insurance?

  It can be. For many policies, it's an optional extra - it's not always included as standard.

Written by

Gary Ross Hunter

Journalist

Gary Ross Hunter has over 6 years of expertise writing about insurance, including life, health, home, and car insurance. Having reviewed hundreds of product disclosure statements and published over 800 articles, he loves simplifying complex insurance topics for everyday readers. Gary has contributed to major outlets like Yahoo Finance, The Sydney Morning Herald, and news.com.au, and holds a Bachelor of Arts (Honours) in English Literature from the University of Glasgow, along with a Tier 2 General Advice certification, ensuring his work adheres to ASIC’s RG146 standards. See full bio

Gary Ross's expertise

Gary Ross has written 580 Finder guides across topics including:

• Health, home, life, car, pet and travel insurance
• Managing the cost of living