What is building insurance?
Building insurance is the 'home' in 'home and contents' insurance, covering the structure of the house itself along with many fixtures. However, it doesn’t cover anything that’s not nailed down, like your personal belongings (that’s the ‘contents’ part).
It helps homeowners repair or rebuild after events like fire, storms and vandalism, covering the physical structure of the home. This includes the walls, roof, floors, and built-in features like kitchens and bathrooms. Some policies also extend to external structures like garages and fences.
If you have a mortgage, your lender probably requires you to have building insurance. But even without a mortgage, it’s borderline reckless to go without it, since a single event like a fire could leave you homeless and hundreds of thousands of dollars in the hole in a matter of minutes.
When am I covered by building insurance?
Building insurance covers damage to your home’s structure from a variety of events, which you can find listed in the table below. Building insurance is marked in an orange border to separate it from contents insurance.
It’s important to keep in mind that this table is just a general guideline, and cover can vary slightly from policy to policy. For example, some policies may toss in one of the optional extras, free of charge, as a perk.
Also, definitions can vary between policies. For example, floods, storm surges, and rainwater runoff might not always be treated the same way from policy to policy.
Check your product disclosure statement (PDS) to see exactly what’s included.
What does building insurance cover?
Building insurance is there to help cover the repair or replacement of the structural parts of your home and related fixtures. While details vary from policy to policy, here's a plain rundown of what you might see covered and a few points to note.
| Category | Examples | Caveats |
|---|
Structural components
| Walls, floors, ceilings, foundations, beams
| Regular wear and tear, maintenance issues or pre-existing damage are usually not covered.
|
Permanent fixtures
| Built-in wardrobes, kitchen cabinets, bathroom vanities
| Damage from ageing or normal use might not be included.
|
Plumbing and electrical
| Pipes, wiring, water heaters, ducted air conditioning
| Leaks and problems from faulty installation or neglect might be excluded.
|
Roof and gutters
| Roof tiles, metal roofing, gutters, downpipes
| Storm damage is generally covered, but rust or corrosion from lack of upkeep usually isn’t.
|
Windows and doors
| Glass windows, sliding doors, locks, security screens
| Extra cover may be needed for accidental breakage.
|
Fences and gates
| Timber, metal or brick fences, automatic gates
| Older or shared fences might have limited cover.
|
Garages and carports
| Standalone garages, attached carports, roller doors
| Structural issues due to movement or poor drainage can be excluded.
|
Driveways and paths
| Concrete driveways, paved paths, garden walkways
| Cracking from ground movement might not be covered unless linked to an insured event.
|
Outdoor structures
| Pergolas, sheds, decks, balconies
| Damage from rot or termite issues is often not included.
|
Pools and spas
| Swimming pools, spas, fixed pool equipment
| Maintenance-related issues, like leaks, may not be covered.
|
Built-in appliances
| Ovens, stovetops, rangehoods, ducted air conditioning
| Mechanical breakdowns generally require extra cover.
|
Landscaping and gardens
| Trees, plants, lawns, retaining walls, irrigation systems
| Coverage is usually limited – storm damage might be included, but normal decay isn’t.
|
Legal liability
| Third-party claims for bodily injury or property damage incurred on your property
| Coverage limits may apply, and not all situations are covered under standard policies.
|
Temporary accommodation
| Short-term housing costs if your home becomes uninhabitable
| Coverage may be subject to daily limits and time restrictions.
|
Removal of debris
| Costs to remove debris after an insured event like a fire or storm
| Only covered if directly related to an insured event.
|
Lock and key replacement
| Replacement costs for locks and keys if they are damaged or lost due to an insured event
| Often subject to policy limits and conditions.
|
Environmentally friendly rebuilds
| Upgrading to energy-efficient systems, sustainable materials used during rebuilding
| Extra costs for eco-friendly materials may not be fully covered
|
What optional extras are available with building insurance?
Standard building insurance covers a lot, but not everything. Here are some add-ons you might want to consider to bump up your protection:
- Accidental damage. A standard policy won’t cover accidents, so adding this to your policy will extend your cover to things like putting a hole in the wall during a DIY project.
- Excess-free glass. This add-on lets you replace broken windows, skylights, fixed mirrors and other glass without having to pay your excess.
- Underinsurance protection. If the cost to rebuild your home turns out to be more than what you're insured for, this add-on can help bridge that gap. Some insurers call it total replacement cover or something similar.
- Flood cover. This protects against damage from floods. Some insurers include it automatically, while others make it optional even for homes in flood-prone areas - leaving it to you to decide whether to take the risk. Floods usually have a specific definition, so make sure you read the PDS to determine how they treat flood cover.
- Landlord cover. If you rent out your property, landlord insurance covers tenant-related risks like loss of rental income due to an insured event, malicious damage caused by the tenant and legal liability.
Every insurer does things a bit differently, so it's a good idea to check your PDS to see which extras come standard and which ones need adding. These extras will bump up your premium, but they could be worth it depending on your situation.
How much building insurance do you need?
You might be tempted to think building insurance should match your home’s market value, but that’s not the case. It’s actually about the rebuilding costs, which depends on factors like location, materials and construction cost.Your insurer will likely do the calculations for you, but it’s good practice to get across it yourself.
There are two main ways to get an estimate:
- Cost-per-square-metre method. This is a quick and easy method, good for a rough estimate. Simply multiply your home’s total floor space by the average construction cost per square metre in your area (you can usually find this info online).
- Elemental estimating method. This more detailed method breaks down costs for materials, labour and unique features and gives a more accurate method. Especially useful for houses with custom finishes.
It’s also important to remember, this number is always in flux. Renovations, new fixtures and rising construction costs can all push up the price of a rebuild. That’s why it’s important to revisit these figures every couple of years, if not more often.
How can I save money on my building insurance?
There are several ways to get cheaper building insurance, without needing to reduce the level of cover you get. Some of these cost-saving moves you can make include:
- Compare and haggle. Always shop around at your policy renewal time to compare offers. 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 insurance company, it's a good idea to know what the competition is offering and see if you can score a better deal by switching.
- Add security features to your property. The more secure your property, the better position you’ll be in to get a lower premium. Add locks on doors and windows, and consider installing security features such as alarms, sensors or cameras.
- Make sure you are getting any relevant discounts. There are a heap of discounts which could be applied to your policy to reduce your premium if you’re eligible for them. You can often get discounts for paying annually vs. monthly, bundling your building insurance with other types of insurance like contents insurance or even car insurance, and signing up for your policy online.
How do I find the best building insurance?
If you’re on the lookout to find Australia’s best building insurance, a great place to begin is by checking out the winners in the 2024 Mozo Experts Choice Awards in the Exceptional Value and Exceptional Quality categories. Our experts analysed the pricing and product data and determined these as the insurance policies bringing to the table the best price, range and features in the market.
No two customers have the same needs when it comes to building insurance; it’s important to bear this in mind when comparing policies.
How to compare building insurance policies?
As always, best practice in choosing any financial product is to assess your needs, compare options and find an offer that aligns with both.
For choosing building insurance, you should have the home valued to ensure you’re covered at the right level. Consider any extra events or elements of your property you might want covered. This could be additional flood cover, or more coverage for your new garden and landscaping.
Then, you should review Mozo’s comparison table above and find a policy which includes the cover that’s matched to your needs.
💡Top tip. When choosing between building insurance policies, it’s important to carefully review the insurable events as well as any cover limits and exclusions in your product disclosure statement (PDS).
What isn’t covered by building insurance?
Not everything is covered by building insurance. There are exclusions to watch out for, and they generally fall into two main categories:
- Specific exclusions, which apply in certain situations or events
- General exclusions, which apply to things insurers generally won’t cover at all
Below are a few examples. As always, your PDS has the full details.
Specific exclusions
- Waiting periods for natural disasters. Many insurers won’t cover damage from events like bushfires, floods or cyclones if they happen within the first few days of your policy.
- Liability damage from major renovations. Your liability cover may not extend to damages caused by renovations exceeding a certain value. Builders are typically required to have their own insurance for this.
- Undocumented lightning strikes. Some insurers require proof, like a repairer’s report or weather records, before they’ll cover lightning damage.
General exclusions
- General wear and tear. Building insurance usually covers sudden, accidental damage—not gradual issues that come from everyday use or ageing.
- Lack of maintenance. If a damaged roof has been leaking for years and eventually collapses, most insurers won’t pay out on something that’s clearly been neglected.
- Vermin and pests. Rats, termites and other critters are considered a maintenance issue rather than sudden damage.
- Actions of the sea. Coastal erosion, tidal changes and regular sea movements are typically excluded (though tsunamis or storm surges might be included under some policies).
- Illegal acts. If damage is caused by illegal activity on your property—either by you or someone you’ve let in—your insurer may reject the claim.
- Unoccupied homes. Many insurers won’t cover a property if it’s been empty for a long stretch (often 60 days or more) unless you’ve arranged it with them.
- Pre-existing structural defects. If your home already has issues like sinking foundations, an insurer generally won’t cover damage that stems from those faults.
Some of these exclusions are straightforward, while others aren’t so obvious. If you’re not entirely sure about something, check your PDS or reach out to your insurer. It’s always better to know where you stand before trouble strikes.
Fire
Theft
Storm
Flood
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