HOME AND CONTENTS INSURANCE
Home insurance covers you for loss or damage to the building you own. Contents insurance covers you for loss or damage to your possessions usually kept in the home. For homeowners, these are often bundled together as a ‘home and contents insurance’ package. Keep in mind that they are separate when working out how much cover you need.
Home insurance helps protect you against things that are out of your control, such as damage from natural disasters like storms, floods and bushfires. It covers the cost of replacing or repairing your home, including fixtures such as lights and built in appliances.
If your home is part of a strata titled building, building insurance is usually organised by the body corporate and paid as part of your strata levies.
If you have a home loan, it is likely a condition of the loan that you maintain an appropriate level of building insurance.
Choosing home insurance
Typically you have a choice of ‘total replacement’ cover or ‘sum-insured’ cover:
- Total replacement cover includes all the costs to rebuild your home to the standard it was prior to an insured event
- Sum-insured cover is more common and will cover you up to a set amount. There are a number of variations to these two basic models, so read the fine print and ask questions if there’s something you don’t understand
Insurers often have calculators available on their website to help you estimate how much cover you may need. Results from different online calculators can vary, so perhaps try a few before making a decision. Keep in mind that the best calculators ask the most questions.
Make sure your home is properly maintained and that you meet the requirements of your insurance policy, otherwise a claim may be denied. Voluntarily installing deadbolts, an alarm or security doors and screens is likely to reduce your premiums.
In addition to the costs of labour and materials, rebuilding your home may have a range of extra costs including:
- Alternative accommodation while your house is repaired or rebuilt
- Demolition and removal of debris from the site
- Architects or other professionals to draw up plans
- Lodging plans with your local council
- Services to make your property safe for workers
Check whether supplementary costs are paid from the sum insured or on top of that amount, as these costs can add up quickly. Insurers cover supplementary costs in three ways:
- The costs are included in the figure nominated for the sum insured
- The costs are paid in addition to the sum insured
- A combination of these approaches
Contents insurance covers the cost of replacing or repairing your non-fixed, or moveable household items and possessions. This includes items such as curtains and blinds, furniture, clothes, linen, free-standing appliances, tools and jewellery. Stand alone contents insurance policies are available for people who are renting or in service accommodation.
To work out how much contents insurance you need, start by listing all your belongings and working out how much it would cost to replace them. Go room to room and take photos of unique or expensive items. It’s also a good idea to keep copies of receipts electronically in a safe place outside your home.
Choosing contents insurance
Contents insurance can cover you for the current (second hand) value of your possessions, or on a ‘new for old’ basis. ‘New for old’ policies tend to be more expensive, but it’s important to consider the type of cover you want, not just the cost.
Some policies cover you for defined events (e.g. burglary and fire) while others cover you for any accidental event. Others give you limited cover if you take an item (e.g. a laptop) outside your home.
You can save money on contents insurance by choosing a higher excess. Conversely if you want a lower excess, you will pay a higher premium. If something goes wrong, think about how much you are prepared to be out of pocket and work on that as your desired level of excess.
Contents insurance for collections or valuables
Most home contents polices ask you to declare ‘collections’ separately. A collection can be anything, for example, coins, number plates, medals or artwork. Ask your insurer what can, or should, be identified separately. If you don’t declare your collections, then you may not be able to claim the full amount of your loss if they are stolen or damaged.
Most insurers only provide limited cover for valuables, such as jewellery, unless you list them as separate items on your policy.
Extended Leave of Absence
If you’re going to away for an extended period and your home will be vacant, be aware that most home and contents insurance policies only cover you for a limited period of time while your home is unoccupied. This is important to remember if you are leaving your home to go on a deployment or other activity.
Policies may automatically lapse if the house is vacant longer than a specified period. Always contact your insurer if you’re going to be away for an extended period of time. If they agree to continue cover, get the agreement in writing, as it may constitute a variation to your contract.
As with any insurance policy, always be completely honest with your insurer and don’t forget to update them if your circumstances change.
Making a claim
Tell your insurer of any damage or loss immediately. This can often be done online or by phone. You may be asked to complete a claim form. Include as many details as possible of the incident, even if they are personally embarrassing.
Keep and provide all documents supporting your claim. Don’t be tempted to add fictitious items to your list of lost or damaged goods. This may be fraud, which is a serious criminal offence.
Cooperate with your insurer and the people they employ to help assess the claim, such as investigators.