
Home insurance for first home buyers: here's what you need to know
How much should I insure my home for?
Voiced by AJ Duncanson, Mozo Data Services Director
Done all the hard work of saving up a deposit, shopping around for a mortgage and finally landing your dream home?
Well now you are probably thinking about getting home insurance to protect your new house from things like fire, floods and natural disasters. One of the most important things you need to work out is how much you should insure your house for.
To do that you need to work out what it would cost you to rebuild your house all over again from the ground up and remember, the price you paid to buy your home is not the same as the cost to rebuild it.
Let’s look at an example.
The Johnson’s have bought their first home for $800,000.
They use an online rebuild cost calculator which takes into account the area of their home in square metres and the building materials used and it tells them that their home is worth $400,000.
Then they speak to a local builder who notices their house is built on a slope and has arched doorways. He tells them to add another $50,000 to their estimate to cover these features.
So in the end, to have adequate cover for rebuilding their home just as it is, the Johnson’s insure it for $450,000.
But it’s not just your house that needs to be insured against dangers, it’s also everything in it. And that means you will need to work out how much contents insurance you will need.
Let’s go back to the Johnson’s.
Again, they can use an online calculator to help them get a good idea of what value they should place on the contents of their home.
To do that they’ll need to answer questions like how many people live in the home, do they have minimal, average or a large amount of furniture and are their belongings average quality, good quality or designer.
With all these questions answered, the Johnsons work out their contents should be insured for about $49,000. So, all up, their home and contents is insured for about $499,000.
Now there are a few other things to consider as well.
If the Johnson’s live in an area that’s prone to natural disasters like floods, they should check if this is already covered or if they might need to pay extra for this cover.
The Johnson’s also have some valuable items like their ski gear and musical instruments, which should be itemised on the policy to ensure they are fully covered.
Two other events often not included are accidental damage cover and cover for loss of personal items when you take them out of the home, so those might be worth considering also.
Now while it might seem a little overwhelming to put a price tag on your home and everything in it, remember, that’s what home insurance is for; to cover the costs if you have to replace everything. So it’s definitely worth taking the time to get it right.
Have an idea of how much cover you’ll need? Take the next step and compare home insurance deals at Mozo.com.au today!
You’ve found the property of your dreams, got the home loan sorted and have the settlement date circled in red on the calendar. What else is left to do but pop the champagne corks? Get home insurance, that’s what. Here’s what you’ll need to know.
If you have been renting you may already have contents insurance for your belongings, but as a homeowner you’ll need to think about building insurance. Actually, you’ll need to do more than just think about it as you’ll generally find that one of the conditions of your new mortgage is to have adequate building insurance coverage.
What does building insurance cover?

Building insurance exists to protect you against things beyond your control like fire, flood or a natural disaster.
There are two types of cover to choose from:
- Total replacement cover. Includes all the costs to rebuild your home and restore it to the state it was in before the insured events.
- Sum-insured cover. This covers damage up to a fixed amount.
What is contents cover, and should I have it?

Contents insurance is a specific kind of policy that covers your household belongings, such as your TV, furniture, clothes, and so forth.
If you already have contents cover, it might be worthwhile bundling this up with your building insurance cover when you buy your first home. Many insurance providers offer bundling discounts and this might be the most cost effective way for you to insure both your home and your belongings.
Otherwise, contents insurance can be a useful policy to have on hand for renters.
Do I need to buy home insurance when buying property?

Home insurance isn't mandatory, but your home loan lender may require is as a condition of your contract, in addition to any lenders mortgage insurance (which protects them in case you default on repayments).
This doesn't mean you have to purchase home insurance from your lender. Shopping around and comparing home insurance providers can clue you into which policies offer great value and coverage.
When should I buy home insurance?
When buying a new home, it's generally wise to have a building insurance policy in place from when you sign the sale contract and pay the deposit. At this stage, you've legally committed to buy the property, though the exact rules vary from state to state.
Generally, you can organise to get a cover note from your insurance company. This can tide you over until the settlement date, when your actual policy kicks in properly.
In most instances, if insurance is required as part of your mortgage contract, a copy of the cover note will need to be sent to your lender in order for them to release the funds for settlement.
You should also get your contents insurance organised before you start moving your things to your new house, as many contents policies include damage or loss of belongings while in transit.
How much does home insurance cost?

The cost of your home insurance will depend on a number of factors including the postcode, whether you are in a disaster-prone area, and how much you choose to insure your home and contents for.
For building insurance, you can set an amount for the sum-insured. While you’ll want to pay the least amount for the best cover available, it is important not to underinsure your property just to save a few dollars on your insurance premium. Think about how much the house will cost to rebuild in current market conditions, including redesign costs and materials, and adjust your sum insured to cover this amount.
There are some ways to lower the insurance premiums on your home and contents. Some insurance companies have loyalty discounts, so if you have your car insurance with the same provider they may offer you a discount on your home insurance.
If you have had your contents insured for a number of years without making a claim, you might also be entitled to a no-claims discount. Don't forget to look for online application discounts, too, which could cut your premium down for the first year. It may also be cheaper to pay your premium on an annual basis rather than monthly.
The final way to reduce the cost of your home insurance premium is to increase the level of excess you are willing to pay upfront if you need to make a claim. The higher your excess level, the lower your insurance premium will be.
How much should I insure my home for?

The price you paid for your home and the cost to rebuild it are not the same thing. The main value of a home is in the land, whereas your building insurance will cover the cost for the raw materials, labour, and designing required to completely rebuild a house in the event of total disaster.
There are two methods insurance providers will use to estimate how much cover you need:
- Cost per square metre. This method provides a rough guide based on the size of the house and the materials used.
- Elemental estimating. Assess in detail the different elements of the building to calculate rebuilding costs from the ground up, using local wage and material rates and other construction data.
Underinsurance is a problem in many parts of Australia. If you are buying in a high-risk bushfire or flood-prone area, it will be important you get an accurate estimate for your building insurance to ensure you are covered in the event of a disaster.
Here's our home insurance checklist for your property to get your started.
Bamboozled by all the home insurance jargon? Read our jargon busting guide.
First home insurance FAQs
Is home insurance mandatory in Australia?
It is not a legal requirement to have a home insurance policy in place for your home in Australia, whether that’s building or contents insurance.
However, most home loan lenders will require you to have a policy in place before the loan becomes unconditional. This is to reduce your perceived financial risk as a borrower, because you theoretically won’t have to pay out of pocket for any household damages such as flooding.
What does home insurance cover?
Home insurance is an umbrella term for a few kinds of policies: building, and contents insurance.
Building insurance covers unexpected damages to the building itself, everything from broken windows to flooding and bushfire damage.
Contents insurance only covers your household belongings against damage, making it ideal for renters. There are a few other kinds of insurance that could apply to a property as well, such as mortgage protection insurance and landlord insurance.
How is home insurance calculated?
Your home insurance premium is calculated by your provider based on numerous factors, which creates your ‘risk profile’. The riskier you seem, the higher your premium (in general). Factors that influence your risk profile include where you live, the amount and type of cover you require, relevant claim history, and compulsory government charges such as stamp duty and GST.
How long do home insurance claims take?
According to the General Insurance Code of Practice, home insurance claims should be answered within 10 days. This means the provider will let you know whether your claim has been accepted or denied based on the information you supplied them.
In some extreme cases, such as natural disasters, providers may take a little longer to respond to your claim. This is because a large volume of claims would be coming through, which would delay processing time. However, insurance providers have also been known to triage affected policyholders, such as during the 2022 NSW/QLD floods, so it may be possible to process your claim quicker.
Home Loan Comparison Table - last updated 9 December 2023
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Unloan Variable
Owner Occupier, Refinance Only, LVR <80%
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Initial monthly repayment5.74% p.a. variable5.65% p.a.For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
CompareCompareUnloan Variable
For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for borrowers. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
- interest rate
- 5.74% p.a. variable
- comparison rate
- 5.65% p.a.
- interest rate
- 5.74% p.a. variable
- comparison rate
- 5.65% p.a.
- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
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- Owner Occupier
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- Weekly, Fortnightly, Monthly
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Read our Mozo Review to learn more about the Unloan Unloan Variable
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Home Variable Rate
Owner Occupier, Principal & Interest, Refinance Only
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Initial monthly repayment6.15% p.a. variable6.15% p.a.Enjoy a competitive variable interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply) Mozo Experts Choice award winner.
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Enjoy a competitive variable interest rate from Up. No application, monthly, annual, redraw, or discharge fees to pay. Up to 50 free offset accounts available. Up home loans are only available to owner-occupiers buying or refinancing in major Australian cities. Up is 100% owned by Bendigo Bank. New joiners get $10 by signing up to the app using code UPHOMEMOZO. (T&Cs apply) Mozo Experts Choice award winner.
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- 6.15% p.a. variable
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- Upfront fees
- $0
- Ongoing fees
- $0.00
- Discharge Fee
- $0.00
- Extra repayments
- yes - up to $30,000
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 90.00%
- minimum borrowing amount
- $50,000
- maximum borrowing amount
- $10,000,000
- type of mortgage
- Variable
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- Principal & Interest
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- Owner Occupier
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Read our Mozo Review to learn more about the Up Home Variable Rate
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Initial monthly repayment6.14% p.a. variable6.51% p.a.Package benefits across Home Loans, Visa Credit Card, Personal Loans and Term Deposits. No package fee for the first year. No application, settlement or redraw fees to pay. Quick and easy application. Free CoreLogic RP Data property reports. *Terms, conditions and lending criteria apply.
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Package benefits across Home Loans, Visa Credit Card, Personal Loans and Term Deposits. No package fee for the first year. No application, settlement or redraw fees to pay. Quick and easy application. Free CoreLogic RP Data property reports. *Terms, conditions and lending criteria apply.
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- Upfront fees
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- Ongoing fees
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- Discharge Fee
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- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- yes
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- -
- type of mortgage
- Variable
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- Principal & Interest
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- Owner Occupier
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- Weekly, Fortnightly, Monthly
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- $0 package fee for the first year.
Read our Mozo Review to learn more about the Credit Union SA Variable Rate Home Loan Special Offer
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Mortgage Simplifier
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Initial monthly repayment6.14% p.a. variable6.43% p.a.Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws. Winner of Australia’s Best Essential Bank in the Mozo Experts Choice Awards.
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Get a competitive variable rate with ING’s Mortgage Simplifier. Free extra repayments, no monthly or annual fees. Freedom to make free extra repayments or redraws. Winner of Australia’s Best Essential Bank in the Mozo Experts Choice Awards.
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- 6.43% p.a.
- interest rate
- 6.14% p.a. variable
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- Upfront fees
- $299
- Ongoing fees
- $0.00
- Discharge Fee
- $250.00
- Extra repayments
- yes - free
- Redraw facility
- yes - free
- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $150,000
- maximum borrowing amount
- $2,000,000
- type of mortgage
- Variable
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- Fortnightly, Monthly
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Read our Mozo Review to learn more about the ING Mortgage Simplifier
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Featured Product
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Investment, Refinance Only
interest rate
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Initial monthly repayment6.04% p.a. variable5.95% p.a.For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
CompareCompareUnloan Variable
For refinancers only. Built by CommBank, the Unloan is the first home loan with an increasing discount (conditions apply) for investors. No application or banking fees. No monthly account keeping or early exit fees. Apply in as little as 10 minutes.
- interest rate
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- interest rate
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- 5.95% p.a.
- Upfront fees
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- Ongoing fees
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- Discharge Fee
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- Extra repayments
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- Redraw facility
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- Offset account
- no
- Maximum loan to value ratio
- 80.00%
- minimum borrowing amount
- $10,000
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- $10,000,000
- type of mortgage
- Variable
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Read our Mozo Review to learn more about the Unloan Unloan Variable
* WARNING: This comparison rate applies only to the example or examples given. Different amounts and terms will result in different comparison rates. Costs such as redraw fees or early repayment fees, and cost savings such as fee waivers, are not included in the comparison rate but may influence the cost of the loan. The comparison rate displayed is for a secured loan with monthly principal and interest repayments for $150,000 over 25 years.
** Initial monthly repayment figures are estimates only, based on the advertised rate. You can change the loan amount and term in the input boxes at the top of this table. Rates, fees and charges and therefore the total cost of the loan may vary depending on your loan amount, loan term, and credit history. Actual repayments will depend on your individual circumstances and interest rate changes.
^See information about the Mozo Experts Choice Home Loan Awards
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