Is home insurance worth it?

Should you splash the cash or keep it in your pocket?

So, should you consider home insurance? Um, yes.

Swap eating out for a dinner at home just one night a week and you could be doing your family (and your home) a huge favour.

With the median house price in Australia now reaching over $600,000, home insurance might be one of the better investments you can make in your life.

Whether you're renting or lucky enough to own your home outright, everyone has possessions that they need to protect.

If you’ve paid off a house, then it’s probably the most valuable thing you own outright. If you’re still paying it off, then insurance can protect your investment to date.

And if you’re renting or living in a strata-owned apartment, then it’s likely going to be even cheaper for you to protect your belongings.

Insurance protects your valuables, and with typical house prices in Australia's more expensive cities pushing half a million dollars, it doesn’t get much more valuable than this.

Not all cover is made equal though, and different situations might call for different cover types.

Home insurance for freestanding homeowners

Think about all those hours you spent turning your house into a home. Perhaps you invested in creating a little veggie patch in the back garden or gave up entire days to renovations, creating the perfect kitchen. Maybe you had to fight off other buyers to come out on top in the property market.

Without home insurance, one disaster might see you lose it all and see you having to dig into your own savings to clean up the mess. The most important thing is to have effective and complete protection for the building itself to make sure it doesn’t come to that in a worst case scenario.

Pay close attention to your total sum insured, and check that you’re covered for the more catastrophic events. Flood cover is often extra, but it can be well worth it if your area is prone to flooding.

Fires are unfortunately fairly common, and bushfires are a particular concern for many regional areas in Australia. Coastal areas may be less at risk of bushfires, but are much more at risk of sea swells and tropical storms.

If you’re in a flood area, then it’s only a matter of time until the next one. If you’re still living there without home insurance when it does, you risk losing everything.

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Home insurance for apartment owners

Home insurance might help protect you against a range of potential liability issues as well as damage to your home including the walls, windows, permanent fixtures and more.

Just because the apartment building is owned by someone else doesn’t mean you can’t benefit from home insurance. It might very well mean that it’s a lot cheaper though.

Contents insurance might be the most valuable part of your cover though, especially as your possessions grow and become more valuable over time.

It’s also worth remembering that your neighbours might be responsible for damage too. If you don't have insurance, it can be an uphill battle to get compensation for your belongings.

Imagine if your upstairs neighbour overflows the bath, and water leaks right through your ceiling to destroy your carpet and some electronics. Without insurance, you’d be on your own to try to recover compensation from them, and the cost of doing so might not even be worth the fees you’ve incurred to do it.

With insurance, you might simply be able to make a claim, and then let the insurance company worry about recovering the costs.

Home insurance for renters

If you’re renting a home or apartment, then you probably don’t need to worry about cover for the building itself. Contents insurance might be important though.

There are some policies that let all of the housemates chip in for combined cover to make it easy, while others can just be used to cover your own personal belongings.

If you depend on any of your possessions, such as a laptop or phone that you need for work and can’t afford to replace outright, then some inexpensive contents insurance might be an exceptionally useful level of protection.

If you’re renting with housemates, then who knows what might happen. They might be the ones who end up damaging or destroying your property or otherwise cause problems. For example, they might accidentally leave the door unlocked, inviting a robber to your home.

Your insurance will not necessarily cover all possible circumstances, but it can cover many.

Plus, if you’re all chipping in for a shared insurance policy, you might not have as much trouble if someone does accidentally damage something. If you caused the problem, then an insurance policy might save you from needing to pay back your housemate, and the premiums might be very good value for money.

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