Home & contents insurance

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Choosing the right insurance for your home and possessions is really important. Here we explain the different types of home and contents insurance you can get and how to decide between different policies.

Home insurance covers the cost of loss or damage to the building you own and contents insurance covers the cost of loss or damage to your possessions. They are often bundled together as a 'home and contents insurance' package but they are actually separate policies so you'll need to work out what cover you need for each.

Choosing a home insurance policy

Home insurance covers the cost of rebuilding or repairing your home and helps protect you against things that are out of your control, such as damage from natural disasters like storms and bushfires.

Total replacement vs sum-insured cover

There are two types of home building insurance. First you need to decide which one suits you best:

  • Total replacement cover - includes all the costs to rebuild your home to the standard it was prior to an event, so you don't need to worry about any shortfalls between what it costs to repair or rebuild your home and the amount you are insured for. Total Replacement policies reduce the risk of underinsurance, but only a few insurers offer these policies.
  • Sum-insured cover - is more common and will cover you up to a set amount to repair or rebuild your home. This set amount is referred to as 'the sum insured'.

All home insurance policies have exclusions, caps and limits and these vary between insurers so it is important to ask questions and read the product disclosure documents when comparing different policies.

Is your home in a risky area?

Some homes are located in areas of increased natural risks, such as bushfire, flood or cyclone. If you live in an area of increased risk it is important that your home insurance covers these events and that you have enough insurance (sum insured) to rebuild or have a total replacement policy.

Most policies cover fire but not all cover for flood and cyclone.

For bushfire risk, you may want to understand your home's Bushfire Attack Level (BAL). If your home is destroyed, you may need to rebuild it to comply with new building codes which can increase the cost of rebuilding. Our storms, floods and fire webpage explains how to find out if you live in a disaster prone area.

Check what the policy does and doesn't cover

Home insurance policies differ between insurers and even between home insurance 'brands' offered by the same insurer. To decide on the best insurance for your home, find out what you are covered for with each policy and what you are not covered for (exclusions) including any caps or limits.

You can find this out on the key factsheet for the home insurance product which will be on the insurer's website, or you can ask them to send you a copy. The factsheet summarises key information about the policy including what you are and aren't covered for.

If you want more detail than what's in the key factsheet, you should read the Product Disclosure Statement which you can also get from the insurer.

Check the policy pays out enough to fix your home

Also check you will have enough insurance money paid out to you to rebuild your home at today's prices. To know if the payout amount is enough, you'll need to work out how much it will cost to rebuild your home. Find out more about estimating rebuilding costs.

It is more important to check this for sum insured policies than total replacement policies as you should be fully covered for a rebuild with a total replacement policy. Some policies offer 'extended cover', but this may be subject to certain conditions and you'll need to check what those are.

How many insurance quotes should you get?

Smart tip

Use at least three calculators to compare sum-insured policies because the results can differ.

Always shop around for the right level of cover at the best price. It's as simple as phoning a few insurance companies, at least 3, or visiting a few websites.

Don't just compare price

When shopping around, it is important to not just compare the prices of policies. You should also compare what is covered and what is excluded and check if the policy offers any additional benefits. For example, some sum-insured policies offer 'extended cover' that provides up to a certain amount, e.g. 30% on top of the sum insured, in the event of a total loss. This is a good way to help reduce the risk of underinsurance.

If you live in North Queensland, the North Queensland home insurance website can help you compare policies.

Choosing a contents insurance policy

Contents insurance covers the cost of replacing or repairing your household items and possessions. This includes furniture, clothes, appliances and jewellery.

Smart tip

Keep receipts of household goods for proof of ownership.

When working out how much home and contents insurance you need, start by listing all your belongings and working out how much it would cost to replace them. Taking photos and doing it room by room is sensible because you may be surprised by how much you have.

You may want to set up an online inventory for these details which can be stored away from your home.

Check what the policy covers

The type of cover you choose will affect the premium you pay. Some policies cover you for defined events (e.g. burglary and fire) while others cover you for any accidental event. Others give you only limited cover if you take an item (e.g. a laptop) outside your home.

There are two main types of contents insurance:

  • policies that cover the value of your belongings
  • policies that replace your belongings with new items e.g. 'new for old'

'New for old' policies tend to be more expensive. Work out what type of cover you want and weigh up the costs.

You can save money on contents insurance by choosing a higher excess. For example, if you can pay the first $1,000 of any loss, the insurance premium will be cheaper.

Case study: Alina and Daniel are burgled

young couple working on a laptopAlina and Daniel moved into a small apartment near the city. They decided to get contents insurance even though their building had a security system.

Two months later their apartment was burgled. They lost their laptop and some DVDs. Alina was very upset but glad they took the time to get the right cover. Her laptop was replaced and she was compensated for the stolen DVDs.

Insurance for special collections or jewellery

Most home contents polices ask you to declare 'collections' separately. A collection can be DVDs, stamps or anything else - ask your insurer what can be identified.

If you don't declare your collections, you may not be able to claim the full amount of your loss if your collections are stolen or damaged.

Most insurers provide limited cover for valuables such as jewellery. You may need extra cover to adequately insure these type of valuables.

Be honest with your insurer

Smart tip

Many insurers won't cover events which occur if your home is unoccupied for more than 60 days. Check your policy.

You must 'tell it like it is':

  • when you buy or renew a policy
  • if you make a claim
  • if your circumstances change

You should also ensure your home is properly maintained. For example, some insurers insist you have deadlocks on your doors and windows. You could also install an alarm. Failing to meet the requirements of your insurance policy may mean any claim you make gets denied.

Don't be tempted to add fictitious items to your list of lost or damaged goods. If you get caught, there could be serious legal implications.

Making a claim

When you want to make an insurance claim, tell your insurer of any damage or loss immediately. This can often be done by phone. Sometimes you will be asked to complete a claim form.

Tell the truth and include as many details as possible of the incident. Keep and provide all documents supporting your claim.

Make sure you cooperate with your insurer and the people they employ to help assess the claim, such as investigators.

Paying out contents claims

Some insurers offer alternative ways to settle insurance content claims.

Insurers may:

  • replace the goods
  • give you a cash settlement
  • give you a gift card.

If you receive a gift card, remember you'll need to use it before its expiry date and it may only be used in a particular chain of stores.

If you have any issues with your gift card or need to arrange an alternative settlement option, contact your insurer.

Find out how to solve other issues with gift cards.

Choosing the right home and contents insurance can give you peace of mind. By researching your options thoroughly, you can protect your most precious asset - your home.

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Last updated: 12 Oct 2016