What insurance do you need to buy a house? First home buyer guide

What first home buyers need to know about home insurance

What type of home insurance do I need?

The type of home insurance you'll need for your first home depends on whether you intend to live in it or rent it out; whether you want to cover the building only or also its contents; and what type of house structure the home is.

Building insurance

Home insurance is often synonymous with building insurance. It covers the structure of your home ('bricks and mortar') and other domestic structures on the property, such as garages, carports and in-ground pools. It also usually covers permanent fixtures, like built-in wardrobes, kitchen cupboards, floating floorboards and light fixtures.

Contents insurance

Contents insurance covers what's inside your home: everything from furtniture to appliances to technology to art, books, clothes and more.

Home and contents insurance

Many people opt for both building and contents insurance, also called home and contents insurance. This means that both your home's structure and contents are covered.

Do I need home insurance if my home is a townhouse, apartment or duplex?

While an apartment in an apartment complex will be part of a strata plan, check whether your townhouse, duplex or villa is part of a strata plan or not.

If your new home is part of a strata plan, any building insurance should be covered by body corporate insurance, also called residential strata insurance. This cost is part of your strata levies and is shared by all owners in the building.

Double-check exactly what is included in this cover with your body corporate. You may need to cover some items like wallpaper and kitchen cupboards separately.

Body corporate insurance does not provide contents cover, so you may want to consider taking out contents insurance for your personal belongings.

Do I need home insurance if I intend to rent out my property?

Consider getting landlord insurance if you intend to rent out your new property. Landlord insurance can cover your investment property for a variety of tenant-related incidents and insured events such as fire, flood and storm. Just like regular home insurance, you can choose between building, contents, or building and contents cover.

Do I need home insurance while my new build is under construction?

Home insurance usually doesn't apply to new builds under construction. Your builder should have domestic building insurance (also called builders warranty insurance or home indemnity insurance) for any works valued at more than $16,000. Builders should supply their domestic building insurance policy and a property's certificate insurance before asking for a deposit to be paid.

When should I get home insurance?

In Victoria, you are responsible for any damage to your home from the settlement date. However, lenders may require you to have cover in place before the settlement date.

You can't be sure whether its current owner (pre-settlement) has adequate insurance or if they cancel their insurance in preparation for settlement. If a fire or other covered events occur during this time, it may help your peace of mind if the property is covered.

Research your home insurance options when making an offer on a property, so that once your offer is accepted, you can quickly organise your policy.

How much home insurance coverage do I need?

Essentially, you should consider taking out as much home insurance coverage as you would need to help cover the repair or replacement costs of your home and contents being damaged or destroyed.

You can use a building insurance calculator^{^} and contents insurance calculator^* to estimate the rebuild costs of your home and the worth of your belongings.

What information do I need when getting a home insurance quote?

Your home insurer will need accurate information about your new home. Inaccurate information could result in a higher premium, or trouble making a claim.

If you don't know any of the following information, request the answer from your solicitor or real estate agent:

• What size the property (home and land) is
• When the home was built
• What type of building the home is (for example, a townhouse or a free-standing house)
• Whether the property is heritage-listed
• What the main construction material is for the walls and roof
• What security features the home has (for example, smoke alarms, deadlocks, CCTV, etc.)
• How much it would cost to rebuild the home today (including all fixtures and fittings).

What does home insurance typically cover?

Home insurance policies could cover insured events such loss or damage from theft, fire, flood, storm, earthquake, water and oil leaks, impact (e.g. from falling trees), or explosion.

Make sure to check all limits, conditions and exclusions on the relevant Product Disclosure Statement.

What other options should I consider with home insurance?

You may want to add optional extra cover to your home insurance policy. For example:

• accidental damage cover - offers cover for accidental mishaps around your home
• valuable items cover - can provide additional cover for certain items inside your home
• portable items cover - covers items like laptops or jewellery that might get lost or stolen when you're out and about.

When thinking about home insurance, you may also want to consider home security options to help prevent loss or damage from theft.

• More: Home security guide: CCTV, alarm systems and monitoring

How do I make a home insurance claim?

To make a home insurance claim, document the damage and submit a claim online or over the phone. You may have to provide some additional information to progress your claim, such as proof of ownership or a police report. After you pay any insurance excess due and your claim is finalised, your insurer will repair or replace what you have lost.

Is home insurance mandatory in Victoria?

While home insurance isn't legally required in Victoria, many mortgage lenders (home loan providers) will require it. It also provides you with peace of mind should an adverse event happen to your property.

^{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.}

^{^ Building calculator: The Cordell Sum Sure Estimate is an estimate of the cost to rebuild the improvements on your property and is generated by the Cordell Sum Sure Calculator which uses available property attribute information (including information you input or confirm) and/or information collated by CoreLogic about the subject property (from insurers and other third party sources) and analyses them against construction industry data to statistically derive a rebuild estimate through a series of computer implemented algorithms (Cordell Sum Sure Estimate).}

^{The Cordell Sum Sure Estimate does not take into account individual design features, site specific conditions, structural conditions and materials, local planning laws or any other regulations and may not be suitable for your particular circumstances. The Cordell Sum Sure Estimate is an indicative guide only and must not be relied upon as an accurate representation of the costs associated with rebuilding your property or in lieu of appropriate professional advice.}

^{While CoreLogic uses commercially reasonable efforts to ensure the Cordell Sum Sure Estimate is current, CoreLogic does not warrant the accuracy, currency or completeness of the Cordell Sum Sure Estimate and to the full extent permitted by law excludes all loss or damage howsoever arising (including through negligence) in connection with the Cordell Sum Sure Estimate.}

^{* Contents calculator: Typical home contents replacement costs are provided by Sum Insured. Whilst all reasonable care is taken to ensure the accuracy of the information as a guide for costing building contents replacement costs, no responsibility is accepted by Sum Insured for its accuracy. Please check with a Valuer or other suitably qualified professional for an accurate costing estimate. Insurance Australia Limited (A.B.N. 11 000 016 722) takes no responsibility for the costs provided by Sum Insured nor any liability for the accuracy of or reliance upon or use of, the costs. This service is licensed to Insurance Australia Limited (A.B.N 11 000 016 722) for use by its customers. © 2003 - 2024 Sum Insured is a trading name of Land Services SA Operating Pty Ltd (ACN 618 229 815) as trustee for Land Services SA Operating Trust (ABN 86 836 650 939). The building contents replacement cost calculator is registered under Australian Patent Number 2010202987.}