What types of home insurance can you get?
Owning your own house is part and parcel of the ‘Australian dream’ but once you’ve found your forever home, there’s a few things you can do to ensure your space is not only protected physically – but financially as well. The biggest and best of these is insurance, yet where do you even start? In this article, we’ll take you through the different types of home insurance policies you can apply for. That way, you can figure out what cover is likely to work best for you before you get bogged down in pricing and extras.
“When buying home insurance, price is important, but not everything.”
- - MoneySmart
The usual suspects
When it comes to building insurance, it’s all in the name. This type of home insurance will cover your house in the event it sustains damages to the main structure or permanent fixtures. That means even your plumbing could be covered.
Typically, building insurance will cover the cost of repairing or rebuilding any buildings on your property that have sustained damages from events such as fire, storms, and floods. Depending on the provider, it can also cover legal liability should someone be injured while visiting your property.
Building insurance is usually intended for owner-occupied properties. So, if you live in a strata title apartment (and chances are yes) your home will already be covered by the body corporate’s insurance.
Unsure if your apartment building is covered?
Contents insurance is designed to protect the ‘contents’ of your home and will cover the repair or replacement of your damaged possessions. Naturally, your possessions have to be damaged from specific events in order for them to be covered. You can’t just claim items that have broken or become worn from use. However, for an additional premium, some policies may also cover your possessions when you take them outside your home.
Given the nature of contents insurance, it can be suitable for both renters and owners. The only exception might be if you’re living in a furnished home. Even then, you may choose to opt for a contents insurance policy to cover the cost of any potential damages to items.
Home and contents insurance
When it comes to different types of home insurance, you’ll often see a combination of building and contents policies. This is otherwise known as: home and contents insurance. Although it may seem like home and contents insurance is one product, most of the time it will be two separate policies under the one agreement. The upside to this – you only have to pay the one premium. Sometimes, insurers will also offer discounted rates on their cover if you take out multiple policies.
Home and contents is often the policy of choice for homeowners, since it covers all the essentials. If you own a unit or apartment though, body corporate may already cover the property for many of the same situations. For apartment owners and renters especially, it’s important to know what is or isn’t covered by the owners of your building/property before purchasing your own insurance. No point doubling up if you don’t need to.
Extras and additional policies
Different types of home insurance will offer different levels of cover. For an additional premium, you can typically get the following extras added to your policy:
- Flood cover: for damage or loss resulting from local flooding
- Accidental damage: typically for accidental damage to fixtures
- Motor burnout: replacement or repair cover if a power surge burns out a motor in your electrical appliance (can also cover associate costs, like food spoilage)
- Personal effects cover: covers portable items you may take away from your home (e.g. jewellery, camera)
- Commercial storage: covers loss or damage to items in a commercial storage facility
Of course, some insurers will offer the above extras as part of their main policy. Flood cover, for example, might be more commonly included in policies for areas prone to flooding. Even if you think you won’t need more than what a policy includes, it’s worth having a look at the extras on offer if you feel you may need additional cover later on.
Renters insurance is a type of contents insurance designed to protect your personal possessions if you’re renting a property. While your landlord is responsible for the upkeep of your rental property, you have to look out for your own belongings. Whether it’s a break-in or a natural disaster, this type of home insurance is meant to act as a financial safety net. As with other contents insurance policies, you can also get additional cover for your belongings when taken outside your home.
Naturally, if you rent or share a place with housemates, it’s worth considering renters insurance. Just bear in mind that most policies won’t let you pick which rooms to cover, only items. So, if you live with flatmates, it’s worth finding out if they’d like to chip in on a policy.
Landlord insurance is a type of home insurance that can protect you against loss of rent, theft or burglary of leased possessions, and damage from natural disasters. If you own an investment property, this type of cover is an ideal way of preserving your investment. Of course, every policy is different. So, your ideal insurance provider may not cover all of the above scenarios. Check out our article on landlord insurance for more details.
Compare your options.
Now you’ve got a better understanding of the different types of home insurance on offer, it’s time to compare your options. Check out our handy comparison guide or head to MoneySmart for more information on choosing the right home insurance.
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Oiyo is a consolidated online resource, we are not financial advisors. We work with a range of industry professionals and compliance check our articles to ensure factual accuracy. However, we do not provide professional financial advice. Consider seeking independent legal, financial, taxation or other advice to check how the information and ideas presented in this article relate to your unique circumstances.