If you are looking to insure your property, whether you are living in it yourself or renting it out as an investment, you’ll want to consider getting building insurance cover. Building insurance includes cover for your home, garage, fences, shed, landscaping and fixed outdoor structures like pergolas against loss and damage caused by fire, break-in or weather events like storm, flood and bushfires.
When choosing between building insurance deals, it is important to carefully review the events covered and any limits that apply to the cover to ensure you will be protected if and when the time comes you need to make a claim. Here are some important questions to know answers to:
What is the difference between sum insured and total replacement cover?
Depending on the building insurance provider and insurance policy options they have you might have the option to choose between a sum insured and total replacement cover. But what exactly does that mean?
If you opt for sum insured you'll choose the amount of money that you insure your home for, and your policy premium will be based on this amount. This is the maximum amount your insurer will pay to repair or rebuild your home. If you choose this option, it's vital to get an accurate idea of how much it will cost to repair or replace your home.
Total replacement cover, means just that. You don’t set a limit to the cover and the insurer will pay no matter what the cost it is to repair or rebuild your home. Keep in mind, this kind of policy will likely come with a higher price tag.
How do I work out how much to insure my property for?
Underinsurance is a major issue in Australia. It is important to have an accurate estimate of the replacement value of your home should you need to rebuild it. To get an accurate estimate, talk to an architect, builder or property expert.
One really important thing to remember is that the cost to insure your home is not the same as the price you paid for your home or property. The land value should be excluded from your calculations - you only need to insure for the value of your home's structure.
Do I need home and contents insurance?
If you will be living in your property it is also a good idea to protect your belongings as well as the building itself. That way, if you're hit by a flood, fire or other disaster and your home and everything in it needs to be replaced, your insurance will cover both.
Many home insurance providers have discounted policies when you take out a combined home and contents insurance policy, so you might even be able to snag a great deal by combining them. Head to our home and contents page to review current deals available by major online insurance providers.
How much does building insurance cost?
The cost for your building insurance policy will depend on a number of factors including where the property is located, the property size and whether you want to opt for a sum insured policy or total replacement cover. For example, insuring a house in a flood prone area will likely be more expensive than insuring somewhere else, and a larger house will come with a steeper price tag than a small one.
To get a personalised quote, first review the insurance policy information here on Mozo. We outline the key events and limits that are included in each policy to help you find one that looks right for you. Once you’ve compared your options you can get a quote directly from the insurer for your property. They will also be able to answer any specific questions related to your property.
Can I pay by the month for building insurance?
Yes, many building insurance policies come with the option of paying insurance costs on a monthly basis. This can help you budget for the cost of insurance by spreading it out, rather than leaving you scrambling to come up with a lump sum payment.
Keep in mind though, you might have to pay extra for the convenience of monthly payments, instead of paying annually upfront, so factor that extra cost into your budget.
How can I reduce the cost of my building insurance?
There are several ways to get cheaper building insurance, without needing to reduce the level of cover you get.
Many people opt to reduce lower their sum insured but then find out at the worst possible time that they can no longer afford to rebuild or repair their home to the standard they would like. Rather than reducing the insured amount, there are several things you can do to reduce your insurance costs, these include:
- Don't auto renew. At renewal time, always take the time to shop around and compare deals. Building insurance providers are just like other businesses and have discounts or incentives that can save you money. Even if you're happy with your current insurer, it’s always a good idea to know what the competition are offering and see if you can use this to haggle a better deal for yourself.
- No claims discounts. The insurance industry will offer ‘good’ customers big discounts on insurance if you have not made a claim in a set period of time. Check to see if the insurance provider has a no claims discount. Many will also honour the discount provided by your current insurer if you can show proof of existing discounts.
- Ensure that your property is properly secured. The more secure your property the lower your premium is likely to be. Put locks on doors and windows, install a security alarm or camera and install smoke alarms.
- Bundle products. You can often secure an additional discount if you have more products with any one insurer. If you are getting building insurance, maybe consider contents insurance as well or think about getting your car insurance moved across at the same time. You can often secure discounts of as much as 20% by bundling and as long as you are getting the same level of cover, that money is better off in your pocket.