Everything you need to know about home and contents insurance

Everything you need to know about home and contents insurance

20 Dec, 2019

Chances are, your home is the most important thing you’ll ever own – not to mention, the most expensive! You spend years saving up for it, jumping through all the administrative hoops, securing a home loan and choosing the perfect one. So, once you’ve moved in, protecting your home – and the cherished belongings inside it – should be of paramount importance. But alarmingly, research from Mozo shows that up to 66% of Australian properties are underinsured when it comes to home and contents insurance.

The bushfires that ravaged our country in 2019 truly highlighted the importance of having adequate home and contents insurance. With more than 500 homes destroyed across the nation, many of these homeowners will be left out of pocket as they start to rebuild. As global warming continues to create unpredictable weather conditions in the new decade and beyond, now is the perfect time to make sure your home is adequately protected. But how do you pick the best home and contents insurance in Australia, and how much will it cost you? And do renters need home and contents insurance too, or is it only for homeowners?

Here, we’ve put together a handy guide to everything you need to know about home and contents insurance.

What is home insurance and contents insurance?

Often purchased as a combined policy, home and contents insurance is a package designed to protect your property and belongings. Should these assets get damaged, destroyed, vandalised or stolen, your home and contents insurance should cover the cost of repairing or replacing it.

What does home and contents insurance cover?

While often sold together, home and contents insurance cover different things.

Home insurance:
Otherwise known as home building insurance, this protects the property you live in and its fixtures (the things attached to it) from natural disasters such as fire, storms and earthquakes. This includes:
  • The roof
  • Walls
  • Floors
  • Plumbing
  • Fences
  • Windows
  • Shed
  • In-ground swimming pool


  • Contents insurance:
    This protects the possessions within the house from damage and theft and in some cases, accidental damage. This includes:
  • Furniture
  • Electronic devices
  • Clothes
  • Toys
  • Curtains
  • Bedding
  • Tools
  • Kitchen appliances
  • Valuables like jewellery
  • Related Text: What are the costs involved in buying a home?


    Why is home and contents insurance important?

    You may be wondering ‘why do I need home and contents insurance?’ After all, it might seem like just another expense on top of all your other bills. However, the cost of having to replace or rebuild your property in an emergency is far greater than any premiums you’d pay for insurance – so it’s often just not worth the risk.

    When you’re properly insured, it allows you to gain quick access to the funds needed to rebuild or repair your home and replace your belongings – so you can get safely and comfortably back into your home sooner.

    While protecting one’s property and belongings is one reason many Australians get home and contents insurance, it’s not the only reason. Many lenders require homeowners to purchase insurance that covers at least the cost of the property. This helps to protect them from the property losing value while you’re still paying off your mortgage.

    Taking out home and contents insurance can also protect you from liability. Say, for example, a neighbour comes to your property, trips over a wire and breaks a bone – they may ask you to foot their medical bill. Having home and contents insurance will help you to cover some of this cost so you’re not left in the lurch.

    home-and-contents-insurance
    During the Brisbane floods of 2011, 28,000 homes were inundated.

    How much will I be covered for?

    The exact amount you will be covered for depends on a number of factors, including your provider, the type of insurance and your individual circumstances. The different types of insurance include:

    Sum-insured policies

    With these policies, you nominate how much your home and contents would cost to replace and they will pay claims up to that amount specified on your insurance policy.

    Safety net policies

    These policies will pay a predetermined percentage of up to 30% above the sum insured amount.

    home-and-contents-insurance

    Total replacement policies

    Applying only to building cover, this type of policy will pay whatever it costs to repair or rebuild your property.

    When it comes to calculating how much home and contents insurance cover you need, it’s best to start with figuring out how much your home would cost to repair. There are a couple of ways you can calculate this, including:

    • Cost-per-square-metre
      This is the simpler but less accurate method. It uses the size of the home to determine how much it would cost to repair or rebuild.
    • Elemental estimating
      The more complex method, this considers a range of factors, including the style and age of the building, which materials were used, the structure of the home and whether it’s on sloping land. Figuring out how much cover you need for contents insurance starts with calculating or estimate the cost of your belongings. While most providers will have a handy home and contents insurance calculator to help determine how much cover you will need, it’s best to come prepared with your own figures in my mind.

    What won’t I be covered for with contents insurance?

    There are many things many basic contents insurance packages don’t automatically cover. These include:

    • Expensive jewellery, artwork or antiques. Many insurance providers will only cover these belongings up to a certain amount, such as $1000
    • Collections, such as toys, DVDs and stamps. While your pride and joy might be worth a small fortune (not to mention the enormous sentimental value), they may not be automatically included
    • Outdoor items such as BBQs, outdoor tables and chairs and playground equipment. These can fall into the grey area between home and contents insurance, so be sure to check whether they’re covered
    • Items used for earning income. For example, if you’re a professional musician, some insurers won’t cover instruments if they make you money
    • Cash! There’s usually a limited cover for the amount of cash you can make a claim for. So, if you’ve got stacks lying around, it might be safer in your bank account

    It’s worth being aware that there are also some circumstances that your home and contents insurance isn’t covered, such as in the case of accidental damage. So, always double check with your insurer when you’re signing up.

    What about the things I keep outside the house?

    If a valuable item such as a laptop, camera, jewellery gets stolen or damaged outside the home, most insurers will not cover this as part of your general contents insurance. Usually, you will need to add on portable contents insurance as a benefit to ensure these items are protected. Similarly, for items kept in storage, you will normally need to add on storage contents insurance.

    How much does home and contents insurance cost?

    When you pay for home and contents insurance, you’re paying for your premium, deducted on a monthly or yearly basis. The amount you pay for this premium is based largely on the likelihood that you will need to make a claim in the future – essentially, the amount of risk the insurer is prepared to take for your property. This is based on factors like the location of your home, the year it was built and construction materials used.

    It’s impossible to give an exact amount of how much home and contents insurance costs, because it varies so widely.  A Finder study analysed eight insurers and found a difference of $1335 between the most and least expensive home insurance policies – sometimes for the exact same home! The location of the property (and the weather conditions that exist there) is a huge factor in determining how much you’ll pay. Canstar’s 2017 Home and Contents Insurance Rating Report analysed the average premiums from state to state, based on a home and contents insurance of $575,000 combined with a $500 excess. They found that the average maximum yearly price for a home and contents insurance policy in Queensland (where tropical storms are frequent) was a whopping  $5,270, compared to $2,116 in NSW or $1907 in Victoria.

    home-and-contents-insurance

    Do I need any additional benefits?

    Many insurance providers allow you to add on additional benefits if they’re not already covered by your policy. These include things like accidental damage, storage content insurance, portable contents insurance or domestic workers compensation. These come at an extra cost, so it’s important to carefully consider your lifestyle when deciding whether to add them on. For example, if you have young children, accidental damage cover might be a priority in case someone throws a ball through a window! Or, if you are renovating your home and will have contractors in your home, domestic workers compensation ensures you’re protected if they get injured on site.

    How can I save money on home and contents insurance?

    The cheapest home and contents insurance isn’t always considered the best option. After all, you want to make sure you’re adequately covered should you need to make a claim. Otherwise, it will just end up costing you far more in the long run. However, there are a few ways to secure a better deal and get more bang for your buck.

    Look for multi-policy discounts

    Buying property in a Trust

    An alternative to the standard way of doing things, buying property through a trust can offer lots of tax incentives and advantages to the right candidate.

    Australia’s insurance market is competitive, so in order to entice customers to sign up or stay, many providers offer multi-policy discounts. This is where you have multiple insurance products with the same company (for example, home and contents, as well as car, boat and sometimes health insurance) and as a result, get discounts applied to each product. Taking advantage of these bundle discounts can lead to significant savings.

    Invest in security features

    If you’ve taken measures to increase the safety and security of your home (for example, smoke alarms, deadlocks and security cameras), you should be able to pay lower premiums for your home and contents insurance. The same goes for cyclone-proofing or fire-proofing your home in areas where there is a high risk of these weather conditions. Be sure to let your insurance provider know which safety features you have in the home and you may score yourself a better deal.

    Request a loyalty discount

    Have you been with the same home and contents insurance provider for multiple years? You may be eligible for rewards for being a loyal customer – especially if you haven’t made many claims. While some providers do apply these discounts automatically, it’s always worth asking what’s available, as it can usually slash at least 5-10% off your premiums.

    Shop around

    Most insurance providers frequently change up their deals and offerings, especially with the ever-changing weather conditions in Australia. So, to save yourself some money, it’s important to keep your eyes and ears open for a better offer. This applies to not only when you are first looking for insurance, but also when the time of year comes around to pay your renewal.

    Can I expand on an existing policy to add more cover?

    So, what happens when you find your area facing unforeseen circumstances you’re not covered for, such as extreme flooding or bushfires? Is it too late to change your cover? With most insurance providers, you can make changes to your existing policy through your online account or over the phone at any time. This includes add-on cover and changing your excess, as well as updating your list of contents. Some insurers will also let you add on the supplementary cover after the fact if you have a sum insured policy. However, it’s important to review your Product Disclosure Statement (PDS) to check what your insurer’s stance is on this.

    Can I insure my home and contents separately with different companies?

    While you may choose to purchase home and insurance separately from two different companies, combining them usually leads to greater value and convenience.

    How do I make a home and contents claim?

    Generally, you can make a home and contents claim with your insurer over the phone or online, using their website. Some insurance companies even have mobile apps, to make it easy to upload photos of the damage straight from your smartphone. In the instance that you do need to be a claim, it’s best to contact them immediately and provide as many details as possible about the incident and damage. If possible, you should also supply images as evidence. This will help your claim be processed as quickly and smoothly as possible.

    Home and Contents Insurance for renters

    Home and contents insurance isn’t just for people who own their own property. Here’s what you need to know about protecting yourself and your current digs if you’re renting.

    home-and-contents-insurance
    According to the 2016 Census of Population and Housing, almost as many people rent as those who own their homes outright.

    Do I need home and contents insurance when renting?

    Homebuilding insurance is designed specifically for homeowners, to cover the cost of rebuilding or repairing their property. So, this isn’t necessary for renters. However, contents insurance is still equally important for people who rent, to ensure that belongings such as clothes, furniture and electronics are covered if disaster strikes. Many tenants opt for renters insurance, which is more specifically tailored to their needs.

    Related: Why should you consider buying a house rather than renting?

    What is insurance for renters?

    Renters insurance is a type of contents insurance that not only safeguards against the loss of personal belongings in the home, but helps protect renters from liability. While the actual building should be covered under your landlord’s home insurance, having renters insurance is helpful for a number of reasons. Firstly, if accidental damage happens in your home and you’re at fault (for example, you accidentally leave an oven on and it causes a fire) it can help protect you from liability. Or, if your rental property is damaged as a result of a natural disaster and you’re forced to live elsewhere, renter insurance can help cover the cost of alternative accommodation or expenses.

    At the end of the day, safe is always better than sorry. In the unfortunate event that you ever have to make a claim, you’ll thank your past self for taking the initiative and being prepared. By referencing eChoice’s handy guide, you can begin your search for a home and contents insurance that perfectly fits your individual needs, property and lifestyle.

    Words by Emma Norris

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