Looking for the best home insurance but don't know where to begin? Learn the steps to get the right cover for your situation.
Not only is your home probably the most expensive asset you’ll ever buy, it’s also the most important. So if disaster strikes and your home is damaged or even completely destroyed, how would you be able to cope with the resulting financial burden?
Home insurance is designed to protect your property against loss or damage caused by a wide range of events, including fire, theft, vandalism, storm, flood, impact, explosion and many more. Available to be bundled with contents insurance as well, the best home insurance can be purchased quickly and easily online from a wide variety of insurance providers.
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So, you want to find Australia’s best home insurance provider? While it’s not possible to make an statements about who is the best insurance providers, some companies are known for their home and contents cover. For example, if you’re looking for building-only insurance, ANZ and OnePath offer a high level of cover at an affordable price. If you want combined home and contents cover, CommInsure and AAMI come out on top.
In Money Magazine’s Best of the Best Award for Cheapest Home and Contents, the following three policies came out on top:
- AAMI Home Contents Insurance. This policy includes new for old replacement, flood cover and the option to specify the value of your treasured items.
- Budget Direct Combined Home and Contents Insurance. With a long list of included features and flexible options like personal effects cover and motor burnout cover, Budget Direct offers comprehensive coverage for your home and belongings. Customers can also enjoy a 35% discount when they buy their policy online.
- Aussie Home and Contents Insurance. Aussie’s policy provides protection against a wide range of defined events and also offers optional flood cover. $20 million of legal liability cover is also included, as is a 25% premium discount when you apply online.
When you’re shopping for the best home insurance policy, look for an insurer that covers the following:
- 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 you policy cover accidental breakage? This covers things like accidentally dropped silverware and the old cricket-ball-through-the-window problem.
- Is there a fusion cover option? Fusion is motor burnout for appliances like your fridge, freezer, washing machine and the like.
- 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 cover 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, as opposed to a sum of money to put towards purchasing a replacement.
It’s also worth keeping in mind that if you ever find yourself having to rebuild your house, not only will you need to cover the cost of materials and labour but also manage a number of extra costs including:
- Temporary accommodation while construction takes place
- Removal of debris from the site and demolition costs
- The cost of architects and other building professionals
- Paying for any work that needs to be done to make your property safe for workers
- Lodging plans with your local council
Take all these factors into account when deciding how much cover will be adequate for your needs.Back to top
- Have you compared quotes? If you’re hunting for the right insurer, make sure to 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 through the PDS? Product disclosure statements might not be the most interesting pieces of literature you’re ever likely to come across, but they do make for essential reading. Look at the benefits and exclusions on competing policies to find out when you will and won’t be covered.
- Do you know your cover needs? Before taking out cover, spend some time working out exactly what you need cover for. Do you need to protect your house against earthquake or tsunami? Do you want sum insured cover or do you want to be covered for the cost of total replacement? Are there any optional extras, for example accidental breakage, that you would like to add to your policy?
- How much are you willing to spend? Price should not be the only consideration when you’re shopping for the best home insurance, but it’s definitely something you’ll have to take into account.
- What do you need cover for? If you’re looking for contents insurance as well, take the time to wander through each room of your home and make a list of the possessions you would need to insure. A great time to do this is each year when your policy is up for renewal.
- Have you checked the credentials of your insurer? Read online reviews at finder.com.au and seek out recommendations from friends and family. You’ll want to find a company with a reputation for reliability and prompt claims processing.
Any basic home insurance policy should cover you against a wide selection of common defined events. These include:If you want the best home insurance, you can opt to add an accidental damage benefit to your policy, while flood cover may also be an extra-cost option. Also look for flexibility when it comes to rebuilding your home, cover for fusion, cover for removal of debris and cover for temporary accommodation costs while your home is being rebuilt.Back to top
Even the best home insurance policy has a list of general exclusions. Your claim will typically not be paid if:Back to top
- Have you shopped around? Don’t just sign up for the first policy you come across. Take the time to compare at least three policies, including quotes, and weigh up the features and benefits they offer. Also make sure to look at product disclosure statements closely before you buy.
- Does your home have security systems? Alarm systems and other security measures can act as a major deterrent for thieves and burglars. As a result, overhauling your home’s security system can greatly reduce the cost of cover.
- Does your insurer offer a loyalty discount? It’s a sad fact of the insurance industry that many insurers offer better deals to new customers than they do to their existing clientele. So the next time you get a policy renewal in your mail box, compare the price of your premium with others on the market. If your provider won’t reward you for being a loyal customer, find one that will.
- Can you get a multi policy discount? Insurers offer discounts when you take out multiple policies with them. To get the best home insurance price, bundle your home insurance together with contents insurance or other policies and see how much your insurer will let you save.
- Is there a discount for buying online? Many insurers will offer sizable discounts if you buy your policy online, so don’t be afraid to purchase cover via the electronic route.
- Can you choose 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? You’ll be able to pay lower premiums in exchange.
Q. What does under-insurance mean?
- A. Under-insurance is when you don’t have adequate insurance cover in place for your requirements. For example, if your property is destroyed and the insurance payout you receive doesn’t cover the cost of rebuilding it, you are under-insured. This is why many people can do better by opting for a total replacement policy instead of sum insured cover.
Q. What if I want insurance for my building and my possessions?
- A. While every major Australian insurer will offer separate building and contents policies, these can be combined to create a home and contents insurance package.
Q. Does home insurance cover my home in case of flood?
- A. Flood cover is not included as standard on some policies, however many insurers do offer this as an extra option for an additional cost. Other insurers have upped their premiums and now offer mandatory flood cover, which means some people are paying for a cover benefit they are never likely to use.
Q. If my home suffers loss or damage due to a defect, will this be covered under my policy?
- A. Check the fine print of your policy to be sure. Generally speaking, defects you were not aware of will be covered, but those that you should have (or could have been reasonably expected to be) aware of will not be included in cover.
Q. What happens to my cover if I go away?
- A. Your home will still be 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 cover and you may need to notify your insurer of your travel plans.
Q. What does legal liability cover provide?
- A. On a home insurance policy, this benefit provides cover when someone else dies, is injured or suffers property damage as a result of an incident which occurs 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 any compensation you may be required to pay.
Following the devastating Queensland floods of 2011, the Australian Government issued a renewed definition of what constitutes a flood to eliminate any confusion when it comes to insurance. Many companies now include flood cover as standard and charge all policyholders and extra premium for this benefit. The inclusion of flood cover is great for some but an unnecessary extra cost for others - such as those that live high on hills - so you may want a policy where flood cover is only an optional extra rather than included as standard.
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. In addition, be wary of the common exclusion that stipulates you will not be covered for bushfire damage which occurs in the first 72 hours of cover.
Pretty much every home insurance policy you come across will provide cover for theft. However, it’s worth pointing out that 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.
Accidental damage cover is available as an option on most home and contents insurance policies, but what exactly does it cover. The definition of accidental damage is roughly the same between all insurers:
Damage that occurs suddenly as a result of an unexpected and non-deliberate external action.
In everyday terms, that could mean spilling red wine all over your new carpet or your kids deciding to draw all over your wall. But while those accidental, one-off events are covered, wear and tear and gradual deterioration are not.
As for whether or not you need this type of cover, that decision is really up to you. It can offer extra peace of mind for some people, but you’ll need to be sure to check your insurer’s definition of accidental damage and any exclusions that may apply. Also remember that it will lead to a noticeable rise in your premiums, so you’ll need to be able to cover this extra cost.Back to top
If you take out the best home insurance policy, you’ll want it to provide enough cover to be able to rebuild your home if it is completely destroyed. There are a number of online calculators to help you work out your sum insured, or you may wish to opt for an extended replacement or total replacement policy.
However, it’s worth remembering that you’ll need your policy to cover more than just the cost of rebuilding. There’s also demolition and removal of debris costs, architect’s fees, alterations to make the site safe for workers to access, submitting plans to local council and much more. If you don’t have insurance in place to cover all these costs, you are under-insured. This means you could end up significantly out of pocket and find yourself struggling financially.Back to top
Many insurers offer new for old replacement on their home and contents insurance policies. This means that if your home is damaged beyond repair, your insurer will rebuild your home as new. If your possessions are stolen or damaged beyond repair, the insurer will replace them with new ones - even if your original possessions were actually quite old.
New for old cover is offered as an alternative to indemnity cover, which means an insurer simply compensates you for the loss of an item rather than completely replacing it. For example, if your five-year-old fridge was destroyed, you’ll get a payout to buy a replacement fridge that is four years old.
While the cover offered by new for old replacement is obviously preferable, it is more expensive than indemnity cover.Back to top
A key facts sheet contains a simple, straightforward and brief explanation of what a home insurance policy offers. Key facts sheets were introduced by the government in 2012 to help make insurance easier to understand for all Australians.
Rather than having to wade through page after page of technical jargon and mumbo-jumbo in a product disclosure statement, customers can now find out what their policy does and does not cover just by looking at the relevant key facts sheet. All the key details are spelled out in clear and simple language, helping people understand a policy before they hand over their hard-earned cash.Back to top
- If an incident ever occurs which could lead to a claim, make sure that everyone on your property is safe and take reasonable steps to prevent any further loss or damage. If you’ve been a victim of theft or vandalism, contact the police immediately and obtain a copy of the incident report.
- It’s also essential that you inform your insurer of any loss or damage as soon as possible. This can usually be done over the phone or online, and you may also be asked to complete a claim form.
- When providing details of your claim, make sure to provide as much detail as possible and be upfront and honest about everything.
- Your insurer may also request information and documents to support your claim, such as police reports, damage reports or photographic evidence.
- Make sure to co-operate every step of the way to guarantee a prompt and hassle-free claims handling process.
Compare home insurance policies today
If you own a home, you should try to find the best home insurance. Of course, you’ll need to make sure that you compare a variety of options before deciding on the best policy for your needs. The best way to find the right cover, is to compare the options available.