Lenders often require home insurance for houses before settlement, needing a certificate of currency.
For strata properties like apartments, building insurance is usually covered by strata fees.
Remember that common policies cover fire and storm, but flood cover often costs extra.
Do you need home insurance when you buy property?
Houses
In the majority of circumstances, yes, most lenders will require you to take out home insurance if you have a mortgage and buy a house.
In most cases, you'll need to make sure you have a policy in place before settlement occurs and you take ownership of the house. This is often because your lender will need the certificate of currency (proof of insurance) before you are responsible for the property. Some states, such as Queensland, require you to have cover when you and the seller sign contracts.
Apartments and townhouses
If you're buying a strata property, such as an apartment or townhouse, you don't need to take out building insurance – insurance should be included in your strata fees. Your conveyancer should be able to get proof of insurance for you.
Finder survey: Do people think home insurance is worth it?
Response
Female
Male
Yes
70.34%
66.17%
No
14.14%
22.37%
I don't know
15.52%
11.47%
Source: Finder survey by Pure Profile of 1113 Australians, December 2023
When you need to get home insurance: State by state
You typically become responsible for the house from 5pm the next business day after the date you sign the contract – this is before settlement.
New South Wales
You are responsible for damage from the settlement date. However, lenders will usually make sure you have cover in place before the settlement date.
Australian Capital Territory
You are responsible for any loss or damage to the property when you exchange contracts so the lender will require you to have home insurance in place by the contract date.
Victoria
You are responsible for damage from the settlement date. However, lenders may require you to have cover in place before the settlement date.
Tasmania
You become responsible for any damage to the property on the exchange of contracts so you need to have home insurance in place by the contract date.
South Australia
You're responsible for loss or damage to the house when you sign the contract – this is before settlement – so you'll need to have home insurance in place by the contract date.
Western Australia
You become responsible for the house either when you're given possession of the property or the date the whole of the purchase price is paid – whichever date comes first.
Northern Territory
You become responsible for the property either when you're given possession of it or the date you pay the whole of the purchase price – whichever date comes first.
What should your home insurance policy cover?
All home insurance policies cover you for most major weather events such as bushfires and storms. However, a small handful don't automatically cover floods. If you are moving to an area with a history or flooding, you probably want this.
Fires (including bushfires) e.g. an electrical fault sparks a fire which seriously damages your home.
Theft and attempted theft e.g. burglars break into your home and steal your belongings.
Storms and rainwater e.g. hailstones damage your roof, letting rainwater inside.
Malicious damage e.g. a vandal graffitis your home and puts dents in your garage door.
Escape of liquid e.g. a pipe bursts and causes water damage throughout your home.
Lightning e.g. a lightning strike punches a hole through your roof.
Explosion e.g. a gas leak causes an explosion and destroys your home.
Impact e.g. a tree falls onto your house, damaging the roof and walls.
Breakage of glass e.g. a stray cricket ball breaks your window or solar panel.
You might have to pay extra if you want:
Accidental damage. Usually an optional extra but sometimes included as standard. It covers mishaps such as a red wine spill or cracked TV screen.
Motor burnout. Also known as fusion damage insurance, it covers the repair or replacement of household appliances if the electric motor dies.
Flood cover. Insurers such as Budget Direct and Qantas don't automatically include this in their cover.
Specified items. If you have any high-value items, they might not be fully covered by a standard policy (most insurers have a cap of around $1,000). However, you can remove this cap with this add-on.
Personal contents. This covers your stuff while it's outside the home. So things like your handbag, backpack or phone.
Sum insured safeguard. If your sum insured ends up being less than the cost to repair, the insurer will increase your sum insured by a certain percentage.
We always do our best to avoid unnecessary jargon but there are a few terms and phrases that regularly pop up when looking for home insurance, so they're worth understanding.
A benefit that means your insurer will cover the total cost of replacing your home, even if it's higher than your sum insured amount.
Underinsurance
A common problem in Australia where people don't take out enough insurance.
Insured events
Specific events that your home insurance will cover, such as break-ins, falling trees and natural disasters.
Sum insured safeguard
If your sum insured ends up being less than the cost to repair, the insurer will increase your sum insured by a certain percentage.
Certificate of currency
A document that confirms an insurance policy is in place – usually required by the lender.
How much home insurance do you need?
Figuring out how much to insure your home for is arguably the most important part of taking out home insurance.
Calculate your sum insured
Your sum insured is the amount your home would cost to rebuild if it was totally destroyed. You usually need to calculate this amount yourself – calculators can help. Make sure that your home is insured for the minimum amount required by your lender. You can usually find this in the loan offer document or by calling your mortgage broker.
Consider a sum insured safeguard
Correctly calculating your sum insured is a pretty big onus to place on homeowners. For example, say you select a sum insured of $800,000 but it costs $1 million to rebuild your home – you would be $200,000 out of pocket. To prevent this, some insurers let you add a sum insured safeguard. This is a safety net that prevents big out-of-pocket expenses by providing up to an additional 30% of cover on top of your sum insured.
What's the best policy for first home buyers?
Just like buying a home, there's no one-size-fits-all for home insurance. While we can't say what's right for you, we can show you some policies we feel could be good depending on your situation. For more top picks, you can check out our best home insurance page.
These policies were chosen based on factors including price, features and unique inclusions. We looked at 17 home insurance brands and analysed over 30 benefits. Remember that there's no single "best" home insurance policy that suits everyone since everyone's needs and budgets differ.
Compare more home insurance policies here
Compare other products
We currently don't have that product, but here are others to consider:
Looking for other options? Check out these similar products.
These products offer a balance between low pricing and more features.
7+
Great
Competitive products within their group.
5+
Standard
Usually these products would either have fewer benefits or higher pricing.
0+
Basic
Offering basic cover with limited features or higher pricing.
Finder Score - Home insurance
We crunch eligible home insurance products in Australia to see how they stack up. We rank over 50 products on 16 different features, including price. We end up with a single score out of 10 that helps you compare home insurance a bit faster. We assess home and contents, building only and contents only products individually.
The cost of your home insurance premium depends on several factors. These include your home's location, its age, the materials used for its construction and the estimated rebuild cost. The sum insured amount you choose, your claims history and any optional extras you add will also affect the price.
You can often reduce your home insurance premium by increasing your excess amount. Bundling your home and contents insurance with the same provider may also offer a discount. Improving your home's security, like installing alarms or secure locks, can sometimes lead to lower premiums. Always compare quotes from multiple insurers to find a competitive deal.
Yes you should consider contents insurance as a first time buyer. While your home insurance policy covers the structure of your property, contents insurance protects your personal belongings inside the home. This includes furniture, appliances, electronics and clothing from events such as fire, theft or storm damage. It is a separate policy or an optional add-on to your home insurance.
When applying for home insurance, you will typically need to provide your personal details including name and contact information. You will also need property information such as the address, year built, construction materials and an estimate of the rebuild cost. Details about any security features or previous claims at the property may also be required.
Your home insurance policy becomes active on the start date specified in your policy documents. For first time buyers, this date is often set to be before the settlement date. This ensures you have cover from the moment you become legally responsible for the property, protecting both your investment and your lender's interest.
If your new home is still under construction, your builder should have construction or builder's risk insurance in place. Once the construction is complete and you take ownership, you will need your own home insurance. For significant renovations, you should inform your insurer as your existing policy may need to be adjusted or temporarily suspended.
If you do not have home insurance by settlement, your lender will likely refuse to finalise your home loan. This could delay or even cancel your property purchase. Crucially, you would also be personally liable for any damage or loss that occurs to the property from the date you become responsible for it, which could result in significant financial loss.
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.
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