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What is home and contents insurance?

Home and contents insurance is a type of cover that can protect your property and/or possessions if they’re damaged or destroyed from an insured event such as fire, theft or storm damage. Depending on the policy, cover can include the removal of debris, legal liability, emergency accommodation and more.

There are a number of types of home insurance and each can bring invaluable peace of mind. The insurance that’s right for you depends on specific circumstances, such as where you live and whether you own a home or rent.

What’s the difference between home insurance and contents insurance?

Home insurance, or building insurance, provides cover for your home’s main structure and other fixtures on the property, such as garages and sheds. It can meet the cost of repairs if your home gets damaged by events listed in your policy. For example, if your roof collapsed after a fire or storm, your insurance can help. 

Contents insurance protects you financially if the possessions inside your home – such as furniture, electronics, jewellery and curtains – are damaged by an insured event and need to be fixed or replaced. A regular policy typically only lets you claim for events that occur inside your home.

A combined home and contents policy offers cover for both a building and its contents. Commonly, building insurance and contents insurance are bundled together, but they’re also sold separately. Standalone contents insurance is a great option if you’re a renter, and/or you live in an apartment where strata fees include coverage for the building. 

Why do I need home and contents insurance?

Here are some compelling reasons why home insurance is a good idea:

• Unexpected damage or loss. Think fires, water damage and theft. These things can happen to anyone, anytime. It's not just about protecting your valuables; it's also being able to rebuild or repair your home.

• Legal liability. Imagine your neighbour takes a tumble on your driveway and breaks an arm. If you're found liable, your home insurance can help you cover their medical expenses.

• Mortgage requirements. Most home loan providers require you to buy home insurance before you can get the keys. It safeguards their investment as much as it does yours.

• Asset protection. Your home is more than just four walls; it's likely your most significant asset. Whether it's for your main residence or an investment property, insurance can protect that asset, from the structure itself to the valuables inside.

• Peace of mind. For each day you hold insurance, you’ll have reassurance that otherwise would be missing. With a good policy in place, you know you’ll have a financial safety net should loss or damage occur to your home or contents.

What kinds of home insurance are there?

Here's a rundown of the main types of home insurance:

• Building insurance. Your home's structure, from the roof to the foundation, is covered by building cover.

• Contents insurance. This one has your back for all the personal items inside your home – like your sofa, laptop and clothing.

• Home and contents insurance. Just like it sounds, this combines building and contents insurance for an all-in-one protective umbrella.

• Landlord insurance. For those renting out properties, landlord insurance covers property damage (including damages caused by a tenant) and can include things like rent default and legal liabilities.

• Renters’ insurance. Essentially, this is contents insurance repackaged for renters. It ensures you're not paying for building protection you don't need.

There are a few other covers that can be their own separate products, or add-ons to your home or contents insurance.

• Portable contents insurance. Ideal for items you regularly take away from your home, like your camera or laptop.
• Valuable items cover. This is where you'd ensure your high-ticket items such as jewellery, artwork or your vintage comic book collection.

What does home and contents insurance cover?

A quality home and contents insurance  policy looks after several key areas:

• Building or home structure. This includes the essential parts of your home like the roof, walls and foundational elements.

• Permanent fixtures. These are items that are attached to and form part of the building, such as kitchens, built-in cupboards and bathroom suites. They're generally considered part of the building or structure.

• Home contents. This encompasses movable items like furniture, white goods, electronics, clothing and personal belongings.

• Fittings. These are items that can be removed without damaging the property, such as light fixtures and blinds. Fittings are typically treated as ‘contents’.

Situations covered: when insurance steps in

Your insurance can provide financial protection in a range of situations. It’s important to consult your PDS for specifics of your policy, but here are a few of the most common events covered:

• Natural disasters. Such as floods, storms, earthquakes and bushfires.

• Accidental damage. Burst pipes, impacts from a vehicle crash and fallen trees are all typically covered. Be aware: accidental fires aren’t covered by all policies.

• Theft and vandalism. Coverage for when your home is broken into or damaged maliciously. Insurance can pay to replace locks and stolen items.

• Liability coverage.  Legal liability protects you from legal costs if someone gets hurt or is killed on your property.

• Temporary accommodation. Protects you if your home becomes uninhabitable after an insured event.

Caveats and exceptions: read the fine print

Every insurance policy is unique and has its limits and exceptions. It's crucial to review your product disclosure statement (PDS) to understand what is and isn’t covered.

For example, you might not be covered for gradual damage like tree roots affecting your foundation. Also, if you don't clean your gutters and they overflow, causing damage, you might not be covered.

Flood coverage often requires a separate policy add-on; and while certain floods might be covered, those resulting from storm surges may not be.

How much does home insurance cost?

The average yearly cost of home insurance, based on our survey of over 2,000 Australians from across the country, comes to around $1,460, which breaks down to approximately $121 per month.

Here’s a state-by-state breakdown:

Remember, these are just averages. Your own quote could be different, so it's a good idea to check with a few different insurers to find out exactly what it would cost for your situation.

Comparing quotes helps you find the cheapest option available, but keep in mind that the cheapest policy might not always offer the most comprehensive coverage. Finding a balance between cheap home insurance premiums and adequate protection is key.

How can I lower the cost of my home insurance?

Home insurance costs have increased in recent years, partly driven by increased risks from climate events. Insurance Council of Australia (ICA) research showed insurers incurred $2.19 billion in claims linked to extreme weather in 2023-24. Storms and floods contributed to an increase in claims from 66,000 to 157,000 in one year.

With premiums running high, there are a number of ways you could reduce the cost of your home insurance: 

• Avoid auto-renewing.  Comparing multiple policies when your policy’s up for renewal is a great way to make sure you’re on competitively-priced cover.

• First-year savings. If you buy a new policy online, you could potentially save up to 30%.

• Multi-policy discounts. You may be able to get a saving if you combine your home cover with, say, your car insurance.

• Security features. A well-maintained home can prevent issues that often lead to claims, and some insurers will reward this with lower premiums. 

• Increase your excess.  By choosing a higher excess, you could pay less for your premiums. Keep in mind you’ll need to stump up more money to make a claim.

For more details on getting the most for your money, check out how to find cheap home and contents insurance.

How do I find home insurance that’s right for me?

Step 1: Decide what kind of insurance you’re after

Are you…

• A homeowner wanting to shield your home sweet home and cherished belongings?

• A renter keen on protecting your personal stuff?

• Or perhaps a landlord in need of coverage for potential property damage and those ‘just in case’ moments?

Once you pin down the product-type that aligns with your lifestyle, we can move onto  pinpointing how much coverage will suffice.

Step 2: Work out how much cover you need

Next, you’ll be tallying up the value of your home and everything in it, so you're completely covered if you ever need to claim. Here’s what you’ll need to consider:

• Home value. Here you’ll need to estimate the value of your home. If you've recently renovated, the added value should be reflected in your insurance. It's about making sure your cover accurately reflects your home's worth, so you're not shortchanged if you ever need to claim.

• Contents. List out what you own, from your gadgets down to your socks. This isn't just about being thorough — knowing the value of what’s inside your home helps you pick cover that’s tailored to you.

• Special Items. Own any items that are a cut above the usual, like heirloom jewellery or collectible artwork? What about any laptops or cameras that travel with you? These might need additional cover since they can go beyond typical policy limits.

Step 3: Compare quotes

Okay, now we're getting somewhere. Click 'Get Quote' for the policies you're interested in. You’ll be taken to the insurer's website, where you'll get an idea of what your premium could be.

It's free and, don't worry, you're not locked into anything. They'll need some details such as your home’s location and its value.

Once you have 2 or 3 quotes, lay them out and compare. This isn't just about finding the cheapest home and contents insurance option; it's about finding the best value. What gives you the best coverage for your money? Are there any additional benefits or features that stand out?

The perfect policy for you is out there, and you're one step closer to finding it!

Step 4: Start your application

So, you've found the right home insurance policy and now it's time to seal the deal. Pop over to the insurer's website or click that link they sent you, fill in your personal details, and don't forget to have your payment information handy.

Most insurers offer various payment options, like monthly or annual instalments, so choose what works best for you. Before you finalise everything, you’ll see when the first payment will be due. Make a note of this to avoid any surprises.

Understanding your home and contents insurance terms

Here are some key terms you can expect to be acquainted with before you sign up for home insurance:

Premium

Excess 

Cover limits 

This is the maximum amount that your insurance provider will pay on claims on certain items. 

Struggling with another unfamiliar home insurance term? Check out our home insurance jargon buster.

Beware underinsurance

Being underinsured means your policy doesn’t cover the full value of your home and possessions. If you insure your home for less than it's worth to save on premiums, it might seem like a good idea—until disaster strikes.

Take a home worth a million dollars, for example. If you've insured it for only $500,000 to cut costs, and then face damages of $500,000, you might expect your insurance to cover it since after all, you did pay for $500,000 worth of cover.

Unfortunately, it doesn't work that way. The insurance company could reduce your claim payout significantly because your coverage is only for half of your home's value. This would leave you to pay out-of-pocket for the rest of the repairs, which isn't a situation anyone wants to be in.

To sidestep the trap of underinsurance, homeowners should stick to a few key practices:

• Stay current with your home's worth. Homes change value like seasons; make sure your insurance reflects the latest, from market shifts to any upgrades you've added to your nest.

• Inventory your belongings honestly. It's not just about what you paid; it's about what it would cost to replace your stuff today. From your laptop to your lounge chair, get it all appraised right.

• Review your policy annually. Life changes and so should your policy. Got a new art piece? Renovated the kitchen? Update your policy so it keeps up with your life’s upgrades and doesn't fall behind.

• Plan for the worst, just in case. It's not about being gloomy, but about being smart. Make sure a total loss won't be a total knockout for your finances.

Remember, a little legwork and knowledge go a long way. Knowing the real value of your home and the nitty-gritty of your coverage keeps you ahead of underinsurance.

How to compare home and contents insurance

Finding the right home and contents insurance isn't just about the cost; it's about getting the coverage that's right for you. To make sure you're comparing apples with apples, here's a straightforward approach to evaluating different policies:

• Policy coverage. Look closely at what each policy covers. Make sure the risks most relevant to you are included. It's important to compare policies that offer similar levels of coverage.

• Exclusions and limits. Every policy has its blind spots. Know what these are, and decide if you can live with them.

• Cost of premiums. While keeping an eye on your budget, weigh the cost against the coverage. Cheaper isn't always better.

• Excess amounts. Pay attention to how different policies balance excess amounts and premiums. The key is to find the balance that suits your budget and coverage needs. 

• Customer reviews and company reputation. What do others say about the insurer? Good customer service can be a lifesaver.

• Additional benefits. Some insurers throw in extra perks. These can be tie-breakers if you're stuck between two good options.

• Policy flexibility. Can you tweak the policy to suit your needs? This flexibility can be a real advantage.

• Claim process. A hassle-free claim process is worth its weight in gold. Check out how each insurer handles claims.

In short, the key to comparing home and contents insurance is to look at each option through a lens that's focused on your specific needs. By taking this approach, you'll be in a better position to choose a policy that offers both value and peace of mind.