Want to find the right home insurance policy for you? Compare policies and protect your home for years to come.
There is no one best* home insurance policy - finding one that works for you really depends on your circumstances. Do you own or rent? Do you live in an area prone to floods? Can you afford the peace of mind that comes with a total replacement home and contents policy? Or are you looking to balance risk and cost with a cheaper policy? While it is impossible to determine which home insurance policy is the absolute best*, this guide will help you navigate the complexities of home insurance and find a policy that fits your needs.
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Always read an insurance policy's product disclosure statement (PDS) to see exactly what the policy covers and excludes.
Your home insurance policy should cover you for:
- Damage from natural disasters such as storms, earthquakes, floods
- Water or liquid damage from leaking pipes
- Impact damage
- Damage caused by animals
- Legal liability cover
Most home insurance policies will not cover:
- Damage caused by your negligence
- Structural faults in your building
- A structure that does not comply with building regulations
- Damage caused by extensions, repairs or renovations
- Damage caused by erosion or landslides (unless the landslide or the result of a storm, tsunami, flood etc. in which case it will be covered)
- Damage caused by the roots of trees, shrubs or plants
There are many terms used in home insurance policies. Knowing what these terms mean makes it easier to find the right home insurance policy for your needs.
Home vs contents insurance
Home insurance covers the structure of the building itself. This is essential if you own your home (or are paying it off).
Contents insurance covers your possessions. This is essential whether you rent or own your home. It is often bundled with home insurance.
What is the difference between defined events and accidental damage?
Defined events covers damage to your home caused by specific events, such as floods, storms or fires. Policies will generally not cover damage caused outside these specified events.
Accidental damage covers defined events but also cover damage caused by everyday activities. Examples include broken windows or wine stains on carpet. Where accidental damage is available as an optional extra, you might think of it as being similar to adding "accidents" to your policy as a defined event.
How do insurers determine the amount my policy will pay?
The insurer will pay claims up to the amount listed on your insurance certificate (the amount you have chosen to insure your home and contents for).
The insurer will pay over the sum insured amount by a certain percentage, for example, 20%. A safety net policy is helpful if the cost of rebuilding your home exceeds the sum insured amount.
For complete peace of mind, total replacement covers the entire cost of rebuilding your home regardless of the cost (within the limitations of the policy).
How do insurers define...
The standard definition of flood is the covering of land that is normally dry by water that has escaped from a natural or artificial watercourse (lakes, rivers, reservoirs, canals and dams). Many insurers include flood cover as a standard part of their home insurance policies.
Fire cover is included as standard in home insurance policies, but you’ll need to check the fine print to see if you’re protected against bushfires. While house fires are typically always covered, bushfires and other associated natural disasters are not always covered by insurers. If you live in a bushfire-prone area, look for an insurer that offers protection against bushfires. Be aware that many policies won't cover you for bushfire damage which occurs in the first 72 hours of cover.
Almost every home insurance policy provides cover for theft. However, many of those policies will not offer any cover if the thief enters your home with your consent. For example, if you hold a party and wake up the next morning to discover something valuable missing, chances are you won’t be covered.
Your home is probably the most important (and expensive) thing you own. You need to make sure your home insurance policy covers you for the things you need. Before you buy, ask yourself these questions:
- Have you compared quotes? Make sure you compare quotes for multiple policies. This is a piece of cake to do online, but remember to consider a policy’s price in relation to the features and benefits it offers.
- Have you read the fine print? A PDS or Product disclosure statement is usually long and boring, but covers all the benefits and exclusions of the policy. Always read the fine print to know what you’re covered for.
- Do you know your cover needs? Before buying a policy, spend some time working out exactly what you need cover for. Do you need to protect your house against tsunamis (not a big deal if you live inland)? Are there any optional extras, for example accidental breakage, that you would like to add to your policy?
- What does the insurer class as defined events? This includes loss or damage caused by things like fire, storm, vandalism, impact, explosion and earthquake.
- Does the policy cover theft? It's not just people breaking in that you should be worried about, find out if your policy covers theft by people you've invited in.
- Does your policy cover accidental breakage? This covers things like accidentally dropped silverware and the old cricket-ball-through-the-window problem.
- How does your policy define a flood? Is flood cover included as standard or is it an option for which you’ll have to pay extra?
- Are your valuables covered for new for old replacement? Finding a policy that offers this feature will ensure that when an item is stolen, damaged or destroyed you can receive a brand-new replacement item.
What should I look for when comparing home insurers?
When researching home insurance providers there are some key issues to consider.
- Customer service reputation. Is your insurance provider easy to deal with? Do they have an online chat service? If you ever need to make a home insurance claim it's probably because of a serious problem. Having an insurance provider that's easily contactable and responsive makes the process much easier.
- 24/7 service and online claims. For the greatest convenience, you want an insurer with 24/7 customer service. This makes it much easier to get in touch with your insurer in the middle of an emergency. If your insurer has an online claims process you can make claims at your convenience and with a minimum of fuss.
- Available policy options. Looking at policy options is a good way to evaluate an insurer. Every insurer offers different policies, even if they sound similar. Some insurers offer highly specific cover levels or optional extras and it's a good idea to look at these in detail before buying. You might find that the insurer has a better policy for you, or doesn't have as much to offer as competitors.
- Claims processing speeds. You don't want to be stuck for months in a storm-damaged house while waiting to see if your insurer will pay your claim. If possible, research how long it takes for the provider to process claims on average. Some providers also offer claims tracking so you can follow the process of your claim from start to finish.
- What do customers say about the company? Customer reviews are a powerful research tool when choosing an insurance provider. Read through posts by customers on reputable forums and check out online reviews. There is a lot of negativity online, so don't take customer reviews at face value. Read from a variety of reviews and seek out detailed, fair-minded evaluations.
Consider your living situation and basic needs when looking for the right home insurance policy.
Home insurance is costly, but there are ways to save. Here are some useful tips:
- Shop around. Take the time to compare at least three policies, including quotes, and weigh up the features and benefits they offer.
- Get a home security system. Alarm systems and other security measures can act as a major deterrent for burglars. As a result, overhauling your home’s security system can greatly reduce the cost of cover.
- Compare before you renew. Insurers offer attractive deals for new customers but often ignore existing ones. Compare the price of your premium with others on the market before you renew a policy. There’s no point being a loyal customer if it costs you money.
- Ask for a multi-policy discount. Insurers usually offer discounts when you take out multiple policies with them. To get an affordable home insurance policy, bundle your home insurance together with contents insurance or other policies and see how much you save.
- Look for online discounts. Many insurers will offer sizable discounts if you buy your policy online.
- Consider a higher excess. If you can afford to pay a higher excess in the event that you have to make a claim, why not get a higher excess added to your policy? This will lower your premium.
What is underinsurance?
You are underinsured if rebuilding your home costs more than the value it is insured for. If disaster strikes your home and you’re underinsured your insurance payment will probably not cover the costs of repairing your home. You can avoid underinsurance by:
- Using a home insurance calculator to determine your total sum insured
- Reading your PDS thoroughly
- Knowing your potential rebuilding costs by hiring a valuer or quantity surveyor
- Being aware of additional costs, such as demolition fees and debris removal
- Updating your cover regularly
For a full guide to underinsurance, head here.
What is new for old replacement?
If your household items are damaged or stolen, new for old replacement ensures that the items will be replaced with new items of similar value. Very old items won't be replaced with the latest models, but new for old protects you against depreciation, making it more affordable to buy new replacements.
Do I need cover for accidental damage?
Accidental damage is an optional extra on many home insurance policies. It can provide peace of mind and protect your home from minor accidents like red wine on carpet or smashed windows. Remember that accidental damage will increase the cost of your premiums. The extent of coverage also varies between providers and policies, so read the fine print carefully.
What does legal liability cover provide?
Legal liability provides cover when someone else dies, is injured or suffers property damage in connection to your property. For example, if a visitor to your home fell down the stairs and injured themselves. Legal liability covers legal costs and compensation you may be required to pay.
What happens to my cover if I go away?
Your home is covered while you’re away on holidays. However, if your home is unoccupied for more than a certain number of consecutive days (60 is a common limit) special conditions may apply to your cover and you may need to notify your insurer of your travel plans.
What is a key facts sheet and do I need one?
Every home insurance policy should come with a key facts sheet. This is a simple document that outlines exactly what you are covered for and other policy specifics you need to know. It is written in clear, non-technical language. Always read through the key facts sheet (and the PDS) before buying a home insurance policy.
* The offers compared on this page are chosen from a range of products finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms "Cheapest", 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your personal financial circumstances when comparing products.