Home and contents insurance policy considerations
Generally, home and contents insurance cover provides cover for your building and its permanent fixtures, as well as contents such as furniture and belongings. Beyond that, and especially if you have a mortgage on your property and some level of insurance is required, there are two main considerations of a home and contents insurance policy:
This provides cover up to a set amount to repair or rebuild your home, and repair or replace its contents. With this type of policy, you choose an amount of cover (for example, $500,000 for your building and $50,000 for your contents) and your insurer will pay up to that amount if you make a successful claim. If you’re not sure how much to insure your home or contents for, you can use one of the home insurance calculators.
Many sum insured policies also include a safety net, which acts as an additional buffer (for example, 20%) if your sum insured is not enough to rebuild, repair or replace your building and contents. This can be beneficial in cases where construction standards have changed and labour costs are higher, such as after a major bushfire or flood.
This provides homeowners with cover for the total amount it costs to repair or rebuild their home. You may be less likely to end up with a shortfall with total replacement cover, but the premium can also be more expensive.
What’s covered in a standard home and contents insurance policy?
Home and contents insurance policies will cover you if your property is damaged or lost due to what’s known as an ‘insured event’. Insured events can differ between providers, but most policies will cover you for:
- Fire and explosion (including bushfires)
- Storm and rainwater
- Flooding (sometimes an optional extra)
- Accidental glass breakage (sometimes an optional extra)
- Earthquake and tsunami
- Theft and attempted theft
- Vandalism and malicious damage
- Impact damage (such as falling trees)
- Escape of liquid (such as burst pipes)
On top of the standard insured events, some policies give you the option to buy extra cover. Common optional extras include:
- Accidental damage insurance: Covers you for loss or damage caused by an accident at your insured property. For example, with accidental damage insurance you’d be covered if someone accidentally knocked over your TV and broke it.
- Portable valuables cover: Covers insured items when you take them away from your home, like jewellery, mobile phones, handbags or clothing.
- Motor burnout: Covers the cost of repairing or replacing burnt-out electric motors in household appliances or equipment.
- Emergency accommodation: Covers the cost of temporary accommodation if you can’t live in your home after an insured event.
Depending on the policy, you might have the option of extra cover for things like:
- Environmental upgrades, such as installing solar panels or water tanks
- Contents while moving to a new house
- Visitor injury or damage or loss to their belongings while they’re at your home
- Vet bills if a pet is injured due to an insured event
- Debris removal and demolition
Keep in mind some policies include some of these benefits as standard cover, which means you don’t have to worry about paying extra or opting in to get cover for what you need.
Other features to consider
Aside from the cover itself, there are a few other important features to think about when choosing home and contents insurance:
- Opportunities to save on your premium: Some insurers offer discounts for combining policies, such as buying building insurance and contents insurance together. Also keep an eye out for special offers and discounts for new customers.
- Payment flexibility: You could often save on premiums by paying annually rather than monthly or weekly.
- Customer support: It should be simple for you to get help when you need it – whether that’s signing up for a policy, asking a question or making a claim.
Review your home and contents cover regularly
To make sure your cover is right for you and to avoid underinsuring, it’s important to review your insurance policy regularly. The cost of replacing and repairing tends to go up over time, meaning you might need more cover today than you did just a few years ago. Likewise, you might need to assess your level of cover and take into account any recent changes such as renovations or big-ticket purchases.
Some insurers will automatically increase your premiums every year so it’s worthwhile looking around to see if you can get a better deal elsewhere when it’s time to renew. Ask for a few quotes (including one from your current insurer) and see if they will match any offers you’ve received as a new customer with a different insurer.
Check the fine print
No two home and contents insurance policies are exactly the same, which is why it’s a good idea to make a cup of tea, find a comfy seat and read (and re-read) the policy product disclosure statement (PDS) before committing. The PDS lays out how a specific policy works, including insured events, when you’re covered and not covered, cover limits and anything else relevant you should know.