Insurance and building wealth: Protecting your assets and future

9 minute read

What you'll learn

• Why protection matters
• Your assets and how to protect them
• Beyond your core assets
• Keeping your insurance up to date

Why protection matters

Protecting your assets with insurance is a way of safeguarding your financial wellbeing and the things you’ve worked hard to build. But how does this work and why does it matter?
 

It’s impossible to predict the unexpected. Things like a severe storm, a car accident or property damage caused by tenants could pose a great deal of risk to you and your financial security. Especially if you didn’t have some form of protection in place.
 

Insurance is one way to transfer the financial risk of those unexpected events, providing a kind of buffer against the cost of repair or replacement. Without adequate protection, rebuilding or replacing valuable assets could mean using savings, taking on additional debt, or selling other investments.
 

In addition to protecting against loss of, or damage to, your assets, insurance can help cover you against liability if you cause injury to someone or damage their property. It can also be a way of protecting your income if you were to become seriously unwell or die.
 

Ultimately, insurance is a handy way to protect your financial stability. And for many Australians, it forms an important part of their long-term wealth and asset protection strategy.

Your core assets and how to protect them

You’ve worked hard to build your wealth with assets like a home, car or investment property, so protecting them should be a priority. Having the appropriate insurance cover can help shield you from unexpected costs due to damage, loss or even liability.

Insurance for your home

For most Australians, the home is one of the biggest financial and emotional investments they’ll ever make. That’s why protecting it with the right insurance for your circumstances can be an important part of minimising financial stress if the property itself, and everything inside, was damaged or destroyed.
 

Home and contents insurance can cover the cost of rebuilding, repairing or replacing what’s lost or damaged following an insured event. We mentioned fire and storm above, but depending on your insurance provider, the list of insured events can include things like earthquakes, break-ins, lightning and even accidental breakage of glass.
 

Insurance can also cover possessions like electronics, furniture and clothing so you know that if disaster strikes, you have a fall-back option and you won’t have to start again from nothing.
 

Here are some important things to consider when choosing home insurance.

What types of home and contents insurance cover are there?

Building insurance

Building insurance covers the physical structure of your home (the walls, roof, fixtures and fittings) against damage caused by a list of insured events. It helps pay for repairs or rebuilding so you can recover without a huge financial setback. It can be combined with contents insurance.
 

Find out more about building insurance at Westpac.

Contents insurance

Contents insurance protects the things at your home, including, appliances and clothing, as well as your BBQ, outdoor furniture and play equipment. Depending on your policy type, and any limits to your cover, it can cover loss or damage caused by theft, fire, storm, or even accidental breakage.
 

Some policies also include portable contents cover, which can protect items you regularly take outside the home, such as laptops, jewellery or bikes. However, you may need to list valuable things separately on your policy to ensure they are covered for the full replacement value.
 

Find out more about contents insurance at Westpac.

Why is it important to keep your cover up to date?

Building and repair costs have risen significantly across Australia in recent years, mainly due to increased labour and materials costs. That means it’s a good idea to regularly check whether your existing policy still reflects the true cost of rebuilding your home.
 

When reviewing your insurance, it’s important to make sure your ‘sum insured’ (the amount your insurer would pay to rebuild your home or replace your belongings) is up to date. Being underinsured could leave you substantially out of pocket if you ever need to make a claim. Here are some handy calculators you could use to see if you’re adequately covered.
 

You may also want to check that your policy includes things like temporary accommodation, cover for specific items of value and flood protection if you live in an area prone to flooding.
 

Because your home often represents years of savings, investment and hard work, without adequate cover, a single severe weather event or accident could undo all the financial progress you’ve made. Home and contents insurance provides a layer of wealth protection, so you can recover quickly and keep your long-term financial plans on track.

Insurance for your investment property

If you own an investment property, protecting it can be just as important as protecting your own home. There are tenant-related risks like loss of rent, damage or liability claims. But you should also have some kind of protection in case the property is damaged or destroyed by an insured event.

While a standard home insurance policy covers owner-occupied properties, landlord insurance is a specific type of insurance designed for investment properties. It can help protect you against financial loss that’s associated with the risks of renting out a property, including the cost of repairs or rebuilding after an insured event, so you aren’t left to pay for it all yourself.

What can landlord insurance cover?

Loss of rent

If your tenants default on paying their rent or leave unexpectedly, landlord insurance may help cover the lost rental income. That way you can stay on top of mortgage repayments and other property expenses.

Tenant damage

Even the most reliable tenants can accidentally cause damage. Landlord insurance is a handy way to help pay for repairs or replacements if your property’s fixtures, fittings or contents are damaged by tenants or their guests. Some policies may also cover intentional damage or vandalism.

Legal Liability cover

As a landlord, you have a legal responsibility to provide a safe environment for tenants and visitors. If someone is injured on your property, or their property is damaged and you’re found liable, landlord insurance may help cover the associated legal costs and any compensation.

Building cover

Building insurance for investment properties can protect the physical structure of your property, including walls, the roof and any built-in fixtures, against insured events like fire, storm, or flood. However, if your property is part of a strata complex, the building may already be insured under the body corporate’s policy, meaning you may only need landlord contents cover for your investment property.

Contents cover (for landlords)

Landlord Contents insurance protects the belongings you have at the insured address that you have left for your tenant’s use, like any appliances, furniture, carpet and BBQs.

Find out more about landlord insurance at Westpac.

Why does landlord insurance matter for wealth protection?

An investment property can form part of a long-term wealth strategy. But unexpected repairs, rent default or legal disputes can turn a profitable asset into a financial burden. Landlord insurance can help ensure your asset continues to deliver returns, thus protecting your income stream and the underlying value of your property. That way you are free to focus on building long-term financial returns.

Insurance for your car

For many Australians, a car isn’t just convenient, it can be essential for work and commuting, getting the kids to school, doing the grocery run, for weekend trips, or for day-to-day independence. So the financial impact of an accident or theft can be significant. That’s why car insurance can play an important role in protecting both your asset (the car) and your budget.
 

Depending on the type of policy you choose, car insurance can provide cover for damage to your vehicle and other people’s property if you’re involved in an accident. It can also protect you against theft, vandalism, natural disasters or even unexpected repairs after a storm or collision.
 

Discover 5 things about car insurance you may not know.

What types of car insurance are there?

Comprehensive insurance

This is generally the highest level of protection available. It covers repairs or replacement of your vehicle after an accident, damage to other people’s property, and loss from theft, fire or weather-related events. Depending on your policy, comprehensive cover can also help with extras such as towing, temporary replacement vehicles and new-for-old replacement on recent models.
 

Find out more about Comprehensive Car Insurance at Westpac.

Third Party Property Damage

This covers damage you cause to other people’s cars or property but not your own. It’s often a more affordable option but could leave you exposed to costs if your own vehicle is damaged or written off.
 

Find out more about Third Party Property Damage Car Insurance at Westpac

Why does car insurance matter for wealth protection?

Even if your car is fully paid off, it is still an asset that can be expensive to replace. If you don’t have insurance, you could be forced to dip into your savings or go into debt to repair or replace the vehicle after an accident or theft. Comprehensive car insurance can help protect your financial stability by covering these types of unexpected expenses.

For families with teenage drivers and multiple vehicles, this could be more important. Having adequate and appropriate insurance for each vehicle can help you avoid paying for repairs or replacement costs after an accident or other insured event.

Beyond physical assets

Alongside protecting your core assets, it can also be worth looking at the bigger picture. Business, income and life insurance, along with effective estate planning, can strengthen your overall financial security and help ensure your wealth continues to work for you and your family.

Insurance for your business

If you’re a small business owner or self-employed, your business may be your only source of income. Protecting it is just as important as protecting your personal assets.
 

Business insurance can cover you against risks like property or vehicle damage, loss of tools or equipment or public liability. It may also provide cover for business interruption if an unexpected event forces you to pause operations.
 

Find out more about Insurance for business at Westpac.

Life and income protection insurance

While insurance for your home, car and investments forms the foundation of wealth protection, broader financial safeguards are also worth considering.
 

Income protection and life insurance can help maintain your household’s financial stability if you’re unable to work due to illness or injury, or if something happens to you. These types of cover options can help keep your mortgage and day-to-day expenses manageable.
 

Together, these steps can help you build a more complete financial safety net that supports both your current lifestyle and future goals.

Life insurance

Generally, life insurance provides a lump-sum payment to your nominated beneficiaries if you pass away or are diagnosed with a terminal illness. This can help your family pay off debts, cover living expenses or secure their future financially.
 

Find out more about the importance of life insurance. Alternatively, you can explore some of the things to be aware of about life insurance including a simple explanation about the different types of cover options that can be included in a life insurance policy, like cover for Trauma or Total Permanent Disability.

Income protection insurance

Your ability to earn is what supports everything else you’ve built. With the right protection for your needs in place, you can feel confident that your future stays secure, no matter what happens.

Income protection insurance can replace a portion of your income if you’re unable to work due to illness or injury and often requires a waiting period to be served before you’re able to submit a claim. If your recovery will take longer than the waiting period, this can help you stay on top of bills, mortgage repayments and everyday expenses while you recover.  

Discover more how income protection insurance can help as part of a wealth building strategy.

Estate planning

Estate planning completes your wealth protection strategy by documenting your wishes for how your assets should be distributed. A valid Will can help secure your family’s financial future, can set up a guardianship structure for your children, and can keep your insurance and finances aligned with your long-term goals.