Home Insurance

Keeping your home and belongings secure with a comprehensive home insurance policy

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Your home is likely to be the most valuable asset you’ll ever own, so it’s important to keep it safe from any potential damage. That’s where a home insurance policy comes in handy. Finding the right policy could be the difference between paying thousands of dollars more in potential damage repairs or other costs, which is why it pays to research and compare before choosing an insurer. In this guide, we take an in-depth look at home insurance, how it works and how you can find a policy that suits your needs through comparing the best options on offer.

How does home insurance work?

Home insurance functions in a similar way to many other types of insurance: it covers your property for various forms of damage it may sustain. In its most basic form, home insurance will solely provide coverage in this area, with usual examples of damage covered in a home insurance policy including:

  • Damage to the property caused by theft
  • Intentional damage caused by a third party
  • Extreme weather damage such as fire, flooding, lightning and earthquake
 

You can also take out a contents insurance policy, which covers you financially in the event that one or more of your items are stolen, damaged or destroyed. Like any other insurance policy, the types of damage and the circumstances in which they occurred that are covered will differ between insurers, but most will either offer an equivalent value to replace the possession or exchange the old one for a new one.

However, homeowners can elect to combine their home insurance and contents insurance policies into one home and contents insurance policy. A home and contents insurance policy is typically more affordable when it comes to the cost of premiums, as you’re sticking with the one provider rather than two. In this case, insurers will usually provide a discount for taking out a combined policy with them rather than shop around for the best of both individually. As a result, your insurance payments become more simplified, as it’s easier to pay one bill for everything at once rather than two separate payments on different pay cycles.

What types of home insurance are available to me?

Depending on your personal and financial situation, you may be looking for one of several different types of home insurance policy. Consider some of the following if you don’t necessarily fit the mould of a standard home and contents insurance customer.

Building insurance

This is another name for home insurance, so it provides you with cover to your home for damage caused by extreme weather or intentional third-party damage. In some cases, internal fixtures like plumbing and built-in cabinets can also be covered by a building insurance policy, as well coverage for any potential legal liability in relation to someone sustaining an injury whilst on your property. This means that it can help fund the costs incurred should your matter end up in court.

In terms of what type of person would look for a building insurance policy, these are more suitable for homeowners who have a freestanding property, rather than a unit, apartment or attached townhouse.

Contents insurance

As mentioned above, contents insurance focuses its attention on providing coverage for potential damage to your belongings. The items that you’re able to insure don’t even necessarily have to be incredibly valuable; while some of the most common insured possessions include televisions, computers, furniture and electrical appliances, it can cover items as simple as your kids’ toys or sporting equipment.

There are two main types of contents insurance that you’ll encounter in the comparison process: new for old and replacement value cover. New for old will cover you for the replacement of a lost or damaged item with a new or equivalent one, regardless of the condition of the original. Replacement value, though, will cover you only for the value of the original at the time it was lost or damaged. New for old provides more extensive coverage in this regard, but the trade-off is that replacement value cover is generally cheaper.

Landlord insurance

Obviously, this kind of insurance is designed for customers who own an investment property and are renting it out to another person or people. There is an inherent risk associated with entrusting your property to a third party, as you’re not really in control of what they can and can’t do while you’re not there. In terms of its coverage, it’ll typically cover the same sorts of areas relating to property damage, including permanent fixtures. Some policies will also offer cover for lost rental income if your tenants become unable to pay or if your property becomes unliveable for a period.

Renters insurance

Just because you don’t own the house doesn’t mean you don’t have to think about insurance. Renters are still at as much risk of having their personal belongings damaged, destroyed or stolen, so a renters’ contents insurance policy wouldn’t go astray. Depending on the severity of the damage sustained and the nature of the event that caused them, as well as the policy, renters could also be eligible for coverage for the cost of temporary accommodation or emergency contents storage.

Flood, fire or storm damage insurance

Insurance for extreme weather events is usually covered by home or building insurance, but different policies may omit certain types of damage from their coverage. As a result, these can often be purchased as optional extras on your policy. Be careful to read the fine print with these conditions, as insurers will often define what constitutes flood, fire or storm damage differently, such as covering damage caused by water stemming from a lake or creek but not the ocean, for example. If you’re living in an area that’s readily affected by any of these types of events, you should ensure that you’ll be covered. Your premiums will probably go up if you’re in this situation, though.

How to compare home and contents insurance policies

Consider these tips when looking to compare the best home and contents insurance policies

Compare the coverage on your policy for property damage

As mentioned previously, no two home and contents insurance policies are the same when it comes to the amount of coverage that they’ll provide you. An example of this may be that a flood runs through your area and causes significant internal and external damage to your home. Under some insurance policies, a weather event like this wouldn’t be covered. In cases like these, you should keep your eye out specifically for the areas in which some policies are lacking and others cater for.

Compare the coverage on your policy for contents damage

Another area to look out for is the extent to which you’re covered for potential damage to your possessions. You’re likely to find that insurance providers will implement a cap on their policies for the maximum they’ll be able to reimburse you for if you make a claim on any contents. If you have a few items that are of particular value, you’ll probably want to look for an insurer whose maximum value coverage extends closer to its actual value.

Consider the cost of your premiums

This is one of the easier ways to compare home and contents insurance policies, but that makes it no less valid. Finding the right insurance policy price-wise can save you a considerable amount in the long run, particularly when you’re covering something as long-standing and permanent as your home. You should try to give coverage and cost as equal a balance as you can in the comparison process, as good coverage for an exorbitant price, as well as cheap insurance for poor coverage, should be avoided where possible. Savvy’s comparison tools are designed to do just that, so these will come in handy for you.

Look at any optional extras different insurers offer

Different insurers will advertise different optional extras for their home and contents insurance policies. These will be added to your policy at an extra cost but widen the net cast by the coverage of your existing policy. To use the option cited above, taking out flood cover or insurance as an optional extra on your policy could save you a significant amount of money and stress. In situations like these, it’s certainly safer to pay that little bit extra for your premiums to ensure safety and peace of mind.

Explained: the optional extras you should look for on your home and contents insurance policy

When you’re comparing home and contents insurance, try to keep an eye on these bonus features for your policy

Frequently asked home insurance questions

Got any other questions you need answered about home and contents insurance? Check out the queries listed below.

How does home insurance work if I live in strata-titled housing?

Home insurance has to work differently if you’re living in strata-titled housing, as your property ownership situation is more complicated than free-standing properties. In this case, home insurance could be included as an element of strata levies, rather than a policy that you seek out on your own. If you’re unsure, check over your strata policy or speak with your strata manager.

How do I reduce my home and contents insurance premiums?

One simple way to do this is by increasing your excess. This is the amount you’ll pay out of pocket when making a claim. By increasing your excess, you’re decreasing the amount your insurer stands to reimburse you, thus in turn decreasing the amount they’ll need from you monthly or annually to cover it. Other methods for reducing your premiums include paying annually, buy into a nicer area and increase your home’s overall security.

Can my home and contents insurance cover damage to, or loss of, my guests’ belongings?

Yes – guests’ contents insurance will usually come as an optional extra for your home and contents insurance policy. Unlike your own contents insurance coverage, however, insurance for your guests’ belongings is likely to only extend to a maximum of several hundred dollars. If you don’t receive this cover or the damage exceeds your policy’s maximum amount, you could be held liable for this damage.

Will the number of claims I make affect my home and contents insurance premiums?

Yes – if you make a lot of claims, you’re likely to be seen as a less safe customer to your insurance provider. To cover themselves for the apparent risk you present, insurers will raise the price of premiums for customers who make claims regularly. For this reason, it’s sometimes worth copping the brunt of the bill you receive if it’s minor enough for you to pay for it yourself and avoid potentially exposing your premiums to the possibility of a price hike.

What’s the difference between total replacement cover and sum insured cover?

These are two of the most common types of insurance available to homeowners. Total replacement cover insures your property for the entirety of the cost of repairing or rebuilding after damage occurs, whereas sum insured cover establishes an amount prior to damage occurring which the insurer and customer agree on.

What happens if I have to make a claim on my home and contents insurance with two different excesses?

You may end up having to pay the more expensive of the two excesses if you make a claim under a combined home and contents insurance policy. However, this won’t always be the case, so you should clarify this with your insurer ahead of time so that you’re fully aware of what you may have to pay after a claim.

Can I still be covered for loss of contents under my insurance policy if they’re stored outside?

Yes – usually, there’ll be some form of cover provided to you for items kept outside. There are obviously certain possessions that are unlikely to be able to be kept inside, such as a barbeque or bicycle, so you’re likely to have some protection in this area. Items left in the front yard are generally met with more scrutiny by a lender, while there are obviously restrictions on the type of item that can be covered when left outside. Some insurers will include sheds in their definition of open air, so you can access greater coverage for your valuable gardening implements under the right policy also.