Home & contents insurance

Protect your home

Protecting your home and possessions against damage or loss is really important. Here's how to compare different types of cover to help you pick a home and contents insurance policy that works for you.

What is home and contents insurance?

Home insurance (sometimes called building insurance) covers the cost of rebuilding or repairing the home you own. Contents insurance covers the cost of loss or damage to your possessions, which can include things like furniture, clothes, computers, fridges, electrical equipment, tools, and jewellery.

These policies are often bundled together as a 'home and contents insurance' package, but they are actually separate policies that cover different things, so you need to work out what cover best suits your needs.

How to choose a home insurance policy

Smart tip

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

There are two types of home building insurance. Make sure you understand the difference between them so you can decide which one suits you best:

  • Total replacement cover - includes all the costs of rebuilding 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 and the amount you are insured for. Having a total replacement policy will reduce your risk of underinsurance, but it's only available from a few insurers.
  • 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'. Some sum-insured policies also offer an 'extended cover' policy that provides up to 30% on top of the sum insured in the event of a total loss - this could be a good way to reduce the risk of underinsurance.

All insurance policies have exclusions, caps, limits and other conditions which can vary between insurers, so it is important to ask questions and read the product disclosure statement (PDS) when comparing different policies.

How to compare different policies

The details of home insurance policies differ between insurers and even between home insurance 'brands' offered by the same insurer.

Compare the features and prices of at least three different policies. This will ensure you have the right level of cover at the best price. It's as simple as phoning a few insurance companies, or visiting a few websites.
Find out what you would be covered for with each policy and what you are not covered for (exclusions) including any caps or limits.

You can get information about policies from the product's key factsheet, 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, read the product disclosure statement (PDS), which you can also get from the insurer or their website.

If you live in North Queensland, the North Queensland home insurance website can help you compare 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 fires webpage explains how to find out if you live in a disaster prone area.

Choosing the best contents insurance policy

Smart tip

Keep receipts of household goods for proof of ownership.

Home owners usually combine their contents insurance policy with home insurance into a single home and contents policy. But these policies are not just for people who own their home.

If you are renting your home, it's important to insure your belongings because, if the worst should happen, landlord insurance will only cover the property the landlord owns - your things are not included.

Types of contents insurance

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. They made a list of everything they owned and how much each item was worth.

Two months after they moved in, their apartment was burgled. The thieves stole Daniel's laptop and some jewellery. They were very upset, but glad they had taken the time to list their belongings and get the right cover. Daniel's laptop was replaced and they were compensated for the stolen jewellery.

How much should you insure your contents for?

To work out how much contents insurance you need, it's a good idea to list all your belongings and work out what it would cost to replace them. You can start by going room-by-room and taking photos of what you own - you may be surprised by how much you have.

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

The Insurance Council of Australia's website, Understand Insurance, has a contents insurance calculator to help work out the value of your possessions.

Contents insurance for people on low incomes

No matter how much you earn, if your possessions are important to you, you need to protect them. It's especially important to insure your belongings if you are on a low income and wouldn't have the money to replace them if they were stolen or destroyed.

Good Shepherd Microfinance has worked with insurance companies to create affordable and simple insurance policies. You can choose between insuring contents that are worth between $10,000 and $20,000, or you can insure a single item (like a fridge or television). These policies have flexible payments options and some premiums can even be deducted from Centrelink benefits. Find out more about the Good Insurance program on the Good Shepherd Microfinance website.

Insurance for special collections or jewellery

Most contents polices ask you to declare 'collections' separately. A collection can be stamps or memorabilia, for example. 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 they are stolen or damaged.

Most policies also only provide limited cover for valuables such as jewellery. You may need extra cover to adequately insure these types of valuables.

Picking the right amount of cover

Smart tip

Check that you have enough cover whenever you renew your insurance or change insurers.

Underinsurance is when you don't have enough insurance to cover all the costs of rebuilding your home or replacing your contents.

Some people underinsure their possessions so that they pay a lower premium, while others simply don't update their level of cover when they renew their insurance or renovate their home, or they may not know how much their house or possessions are worth.

How much cover do you need?

When working out how much cover you need, consider the possibility that your whole house could be destroyed, for example, by a bushfire or other natural disaster. Does your policy provide enough insurance to cover the cost of rebuilding your house? See estimating rebuilding costs and home insurance supplementary costs.

Also see our webpage about storms, floods and fires for information on insurance for natural disasters.

Does your policy reflect how much your possessions are really worth? Your insurer will calculate your claim based on the insured value. For example, if you only insure your contents for $20,000, but they are actually worth $40,000, your insurance would only cover half the replacement cost if they were damaged or lost.

Check what the policy covers

Many people only read their policy when they need to make a claim, but then it's too late to make any changes. If you already have insurance, check your policy now to see how much your insurer will pay and under what circumstances.

Also check when your insurer will reject a claim. For example, some insurers won't cover events which occur if your home is unoccupied for more than 60 days. Also, some insurers insist you have deadlocks on your doors and windows. If you don't meet the requirements of your insurance policy, any claim you make may be denied.

How to make a claim on your policy

If you need to make a claim, contact your insurer immediately. You may be able to lodge your claim by phone, but some insurers ask you to submit a claim form.

When you lodge a claim with your insurer:

  • Be honest. 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.
  • Provide as many details as possible about the incident.
  • Provide all documents that support your claim, and keep a copy for your own records.
  • 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
  • pay you the cost of repairing or replacing 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. Visit our webpage on gift cards for tips on other things to be aware of.

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

Choosing the right home and contents insurance can give you peace of mind. By researching your options thoroughly, you can protect your most precious possessions from loss or damage.

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Last updated: 09 May 2017