Home insurance Australia: find and compare policies

Home insurance is an insurance policy that covers one of your most important assets – your home. If disaster strikes and your property suffers accidental damage, malicious damage, or is even destroyed, you may be financially covered, allowing you to more easily make a fresh start.

The two most common types of home insurance cover are Total Replacement cover and Sum-Insured cover. 

Total Replacement cover refers to the actual cost of replacing your house entirely, whether by rebuilding, renovating, or repairing after heavy damage. This kind of home insurance policy will likely cost more, and possibly require extended negotiations with the insurer. 

A Sum-Insured policy covers a predetermined maximum cost to be paid by your insurer – the insured sum - in the event your house gets damaged. Setting the insured sum can be tricky; if it’s too high, you may pay more than is necessary for your insurance premiums, and if it’s too low, the payout may fall short of the actual cost of repairing or rebuilding your home, leaving you underinsured and having to pay for repairs out of your pocket.

Home insurance (sometimes called building insurance) only protects the structure of your home, not the personal belongings that your home contains. To protect both of these, you’ll need home and contents insurance. This may be a single combined policy that covers both your home and its contents (combined home and contents insurance), or separate policies covering each.

If you buy a home and contents insurance policy, you can recover the cost of replacing any accidental loss or damage to your possessions if disaster strikes, in addition to the cost of renovating or rebuilding your home. This can include furniture, white goods, electrical appliances, computers, jewellery, and artworks.

In many cases, home and contents insurance covers water and fire damage caused by accidents inside the home, as well as theft and vandalism. You can also purchase additional insurance coverage, called "personal effects cover" for portable contents that you may carry outside the home, such as laptops. Insurers may also offer optional coverage for any high-value items you may own. 

Before you purchase a home and contents insurance policy, remember to compare insurance quotes online.

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If you’re purchasing a home with the help of a home loan, you may need to take out home insurance on the property. Home insurance is often a requirement for home loan approval, and you may be advised by the bank or your broker to purchase home insurance for the property ahead of settlement.  

If you’re purchasing a unit, townhouse, or similar property, the strata corporation that manages the complex may already have insurance in place covering damage to the structure, partially paid for by your strata fees. This may be enough to satisfy your bank or mortgage lender, so you may not need to take out a separate home insurance policy to get a home loan on a strata property.

Of course, you may still choose to take out a contents insurance policy to protect the possessions in your strata property, as this likely won’t be covered by your strata’s insurance over the complex.

Home and contents insurance isn’t always essential, but it can be valuable in the right circumstances. For example, if you were to lose your house in a fire, home insurance may cover the cost of rebuilding, as well as other expenses such as temporary accommodation for you and your family. But unless you also had contents insurance, you’d have to pay for replacing your treasured possessions yourself.

Home and contents insurance may also help cover a wider range of options than home insurance alone. For example, if your home experienced a break-in, your home insurance may only cover the cost of broken windows or busted locks, while the contents insurance may allow you to replace your stolen possessions without ending up out of pocket.

Contents insurance alone may be an option for renters to consider, as it may be able to protect their belongings from theft or vandalism even if they don't own their home. 

Landlords may be able to benefit from landlord insurance, which is similar to home insurance but also covers risks that specifically relate to property investment, such as defaulting tenants, and may also provide some legal liability.

What your home insurance policy covers and what it excludes can vary based on your provider, as well as the policy purchased. A home insurance policy typically covers your entire property, including permanent structures such as fences, in-ground swimming pools, garages, tool sheds, and walk-in wardrobes.

While each policy may be different and depend upon your type of cover and level of cover, some of the common events that may be covered under home insurance may include:

• Accidental damage
• Breakage of glass and ceramics
• Earthquakes
• Escape of liquid e.g. burst pipes
• Explosions
• Fallen trees
• Fires
• Floods
• Lightning strikes
• Malicious damage
• Rainwater
• Storms
• Vandalism

There are usually two types of homeowners insurance you can choose from. The type you choose helps determine the level of coverage you will receive:

• Total replacement cover: covers the cost to repair or rebuild your home to the state it was before the insured event occurred. You won’t find this option with every insurer and where it is available, you can expect it to be more expensive.
• Sum-insured cover: covers your home to a maximum amount pre-determined by you. This is the amount that you estimate it would cost you to rebuild your home if it is destroyed or becomes a total loss. This cover type may be less expensive, though a homeowner is more likely to end up underinsured with sum-insured cover.

If you’re not sure which option to take, it could be worthwhile to speak to a professional valuer to understand how much it might cost to rebuild your home.

Your policy’s product disclosure statement (PDS) will give you a clearer picture of the covered incidents or damages, and the limits specified for each. The PDS will also tell you which incidents or contents are excluded and whether you need to purchase additional coverage.

It’s often wise to review your property insurance policy regularly to make sure your house is adequately covered, particularly if you have renovated or extended your home.

The cost of home insurance varies based on a wide variety of factors, including:

• The location of your home
• The age of your home
• The type of property
• The size of your home
• The features of your property
• Whether you’re paying annual or quarterly premiums
• Whether you’re an owner occupier or a property investor
• What extras or add-ons you want included in your home insurance policy
• Your claims history
• Your level of home security

Different home insurers may quote different prices for the same home so it’s important to compare insurance products before choosing a home insurance policy.

Some areas of Australia are notorious for their high insurance premiums. This is because Australia’s extreme climate can make some homes particularly vulnerable to natural disasters such as bushfires or floods.

If you live in an area that’s at high risk of experiencing natural disaster, you may find that your insurance quotes are much higher than those for other areas of Australia. You may be able to reduce the cost of insurance somewhat by showing that you’ve taken steps to reduce the risk of natural disasters affecting your property (e.g. cutting back vegetation on your property to help reduce the risk of fire).

Some types of natural disaster insurance (e.g. flood cover) may be considered an optional extra that you can opt out of if your higher than average risk is making your insurance premiums unaffordable. While your home won’t be covered against the event in question, you may still be covered against other damage and misadventures.

A home and contents policy will likely cost more than just a home insurance policy, however you’ll be receiving more coverage that protects your possessions as well as your property.

The cost of the contents portion of your home and contents insurance policy may depend on the estimated value of your home’s contents.  

Much like home insurance, contents insurance is often available with either Total Replacement cover or Sum Insured cover. Total Replacement cover should pay for the cost of replacing your possessions, though the premiums may cost more. Sum Insured cover lets you claim back the cost of lost or damaged items up to a predetermined maximum, which may help to lower your premiums, though you risk being underinsured.

You may also be able to highlight specific high-value items in your contents insurance policy, or insure them separately.

Most insurers will give you a choice of whether to pay for your home insurance monthly, quarterly or yearly.

Making smaller, more regular payments may be less stressful on your wallet than making one lump sum payment. However, the annual total cost of your insurance may turn out cheaper by making a single payment rather than a larger number of smaller payments.

When comparing home and contents insurance policies, consider answering the following questions, as this can guide you in choosing the policy you need: 

1. What will it cost you to rebuild or renovate your home, and replace all your valuables? What percentage of this cost are you comfortable paying on your own? Which of the insurance policies that you are comparing adequately covers the difference?
2. Of the shortlisted policies, which ones are most specific in detailing the coverage limits for specific items? Which ones offer you protection against the most common risks in your neighbourhood?
3. It's worth checking for conditions specific to you. For example, do these policies have any restrictions regarding the presence of pets in the house? 
4. Check whether the insurance policy covers emergency support, such as temporary relocation while your house is being renovated.
5. Even if the policy you choose seems to offer thoroughly adequate protection, you may miss out on some optional cover. Always read the insurance provider’s product disclosure statement (PDS) or confirm with the insurance company about any limits, conditions, or exclusions before making a decision to purchase a policy.

You should review your home insurance policy periodically to ensure that your house and your possessions are adequately covered. Regular insurance policy reviews can help make sure that your insurer has not added exceptions or changed the coverage limits, and keep your home insured. 

Such a review also helps you keep your policy up to date in terms of changes or renovations to your home. For example, if you decide to build a new tool shed in your backyard but your insurance policy doesn't cover it, you could lose out on coverage if the shed or its contents are damaged. Likewise, if you buy a home and contents insurance policy and acquire high-value items which are beyond the policy coverage limits, your insurance policy will likely require a similar update.

Making insurance comparisons can help give you a better idea of whether it's time to consider switching to another insurer, whose home and content insurance offer better suits your needs.