How to find a home insurance policy that suits your needs

A guide on finding a home insurance policy to suit your needs

What kind of home insurance do homeowners need?

There are three main types of home insurance.

Building insurance provides cover for your house itself, plus home improvements like a garage, carport or in-ground pool. It also covers fixtures or items permanently attached to your home, such as light fixtures, kitchen cupboards, floating floorboards or built-in wardrobes.

Contents insurance provides cover for items that you own that aren’t permanently attached or fixed to the structure of your house. It may be useful to keep proof of ownership and value for your items, like a receipt, valuation or photograph.

Combined home and contents insurance offers cover for both the above. Check whether you can get a discount for combining your cover.

If you own an apartment or townhouse and your home shares common property, you may not be sure of what's protected by your strata insurance. Strata insurance is mandatory in Australia, and normally the cost is split between the individual unit owners and included in your annual levy. However, strata insurance doesn't cover belongings inside your property or anything that is not permanently attached to the building, and it is recommended that you protect your own valuable assets with contents insurance.

What kind of home insurance do renters need?

Renters can consider getting renters insurance, which provides cover for items that you own and that you keep in or around your home. Renters insurance can help you cover the cost of repairing or replacing your belongings, including appliances, electronics, furniture and clothing, if they’re lost or damaged in an insured event. There are other specific benefits such as temporary accommodation for tenants, if a listed event causes your home to become unliveable, for the time it takes to rebuild or repair or for up to 12 months.*

You don’t need buildings insurance if you’re a renter: that is your landlord’s responsibility.

What kind of home insurance do landlords need?

Landlords may wish to purchase landlord insurance, which covers your investment property for insured events like fire, flood and storm, plus certain tenant-related incidents. Just like homeowners, landlords can choose from building, contents (that is, cover for furniture and furnishings provided to tenants) or combined cover for their investment property.

Landlord insurance can help protect landlords from damage by tenants or tenants’ pets,** rent default cover of up to $10,000 if your tenant stops paying rent or leaves without notice,***, cover for loss of rent for up to 12 months if your rental property is unable to be lived in following an insured incident,**** and other tenant-related incidents.

Check the related product disclosure statement for a full list of inclusions, conditions and exclusions.

What does home insurance cover?

Home insurance, whether for buildings or contents, typically covers a range of insured events like:

• Theft – things stolen during a break-in, or damage caused by attempted theft.
• Vandalism – damage caused by vandalism or a malicious act.
• Fire – damage caused by fire (like a bush fire, kitchen fire or electric fire), smoke and soot.
• Flood – damage or loss caused by an escape or release of water from things like lakes, creeks, rivers, canals or dams.
• Storm – damage or loss caused by rain, hail, lightning, snow or wild winds.
• Earthquake and tsunami – damage or loss from an earthquake or tsunami, plus an immediate resulting landslide or subsidence.
• Impact damage – damage caused by falling trees and branches, a car that’s lost control, power poles, or aerials.
• Explosion – damage or loss caused by an explosion from things like gas boilers or electronic devices, plus the explosion’s resulting landslide or subsidence.
• Water and oil leaks – sudden leaks from pipes,  toilets, fixed heaters and cooling systems.

Home insurance policies may also cover you for damage or loss caused by riots or civil commotions, or liability cover if someone else injures themself on your property.

What are some extra benefits that may be included in home insurance policies?

It’s a good idea to check whether your insurer offers any extra benefits on your home insurance policy.

They could, for example, cover extra costs associated with repairing or rebuilding your home (for example, demolishing and removing debris or temporary accommodation), or with replacing your contents (for example, cover for visitors’ belongings, spoiled food due to a listed event, or cover for contents at both the old and the new home for a certain period when moving homes).

What optional extras can you add to your home insurance cover?

There are four main types of optional ‘extras’ that you can add to your Contents Insurance or Combined Home and Contents Insurance cover.

• Accidental damage covers you for unintentional damage, such as dropping your TV or putting your foot through the ceiling when in a crawlspace.
• Fusion cover insures against burnout of electric motors, such as in a washing machine, fridge or ducted air conditioning unit.
• Valuable items cover allows you to increase your insured amount for a specific category – for example, works of art, jewellery and watches, special collections, or music, games and movies.
• Portable items cover keeps items such as portable electronic devices, sporting and recreational items, jewellery and watches, glasses and medical items, clothing and luggage, or mobility scooters insured outside your home.

Always read the relevant product disclosure statement for any conditions and exclusions.

What doesn’t home insurance cover?

Home insurance generally will not cover loss or damage that results from pre-existing damage, wear and tear, or gradual deterioration. You must keep your home in good repair and condition through regular maintenance and take reasonable care to protect your home and contents against loss or damage.

Always read the product disclosure statement for a full list of exclusions.

How do I calculate my sum insured?

Your sum insured is the amount of insurance you choose to cover your home and/or contents. This is an estimate of how much it would cost to rebuild your home if it was totally destroyed, including GST.

Your contents sum insured should equal the current total cost of replacing all of your contents, including GST.

It’s important to list your sum insured as the full replacement value of your home and/or contents. Make sure to keep your sum insured up to date when your home’s value changes – for example, renovations – or when you add expensive contents to your home.

To help estimate your sum insured, use the online buildings and contents calculators. 

How are insurance premiums calculated?

Your home insurance premium is based on the likelihood of a claim being made under your policy.

This premium is calculated based on a range of factors, including your address, the construction materials of your home and roof, and the amount that your buildings or contents are insured for. To find out how insurance premiums are calculated, read the RACV Insurance product disclosure statement.

You can reduce your premium by choosing a higher basic excess: the amount you contribute towards the cost of your claim. Make sure you can comfortably pay your chosen excess in the event of a claim.

How do I compare home insurance policies?

It's a good idea to compare home insurance policies like for like. Go through each option’s product disclosure statements to compare things like:

• Which insured events the policy covers
• Optional cover you can add on to the cover
• Premium and excess pricing
• Sum insured limits
• Pay-out limits for each category
• Any extra benefits included
• Whether discounts are offered for holding multiple insurance policies.

^{The information provided is general advice only. Before making any decisions please consider your own circumstances and the Product Disclosure Statement and Target Market Determinations. For copies, visit racv.com.au. As distributor, RACV Insurance Services Pty Ltd AFS Licence No. 230039 receives commission for each policy sold or renewed. Product(s) issued by Insurance Manufacturers of Australia Pty Ltd ABN 93 004 208 084 AFS Licence No. 227678.}

^{* If you’re renting the property (a tenant), reasonable extra rent costs will be paid for temporary accommodation.}

^{** Four times the weekly rental amount will be deducted from your claim in addition to any excess that applies. A valid rental agreement is required. This cover is not available if a previous claim for rent default, theft or damage by tenant has been paid under the same tenancy}

^{*** Four times the weekly rental amount will be paid in addition to any excess that applies. A valid rental agreement is required. This cover is not available if a previous claim for rent default, theft or damage by tenant has been paid under the same tenancy or if the tenant is behind in rent payments before your policy begins.}

^{**** Covered under Landlord Buildings Insurance only. This cover is not available if you also make a claim for rent default and your claim is paid, or for loss of rent resulting from theft or damage by a tenant or their guest. A valid rental agreement is required.}