Making Sense of the Australian Home Insurance Market



Is your home adequately insured to survive everything from natural disasters to theft? About 23% of homeowners in Australia do not have an insurance policy for their homes or property. Whether your Australian property is underinsured or you’re sure “it won’t happen to me,” many homeowners don’t consider the severe cost of skipping home insurance.

If you’re wondering how to secure the cheapest home insurance with the best cover, read on to learn how to navigate the insurance market.

What Is Home and Contents Insurance?

Home insurance, or homeowners’ insurance, is a policy that covers a residential property. Home insurance protects the brickwork and permanent fixtures of the property. This may include outbuildings and garages permanently fixed to your land (i.e. not vehicles or camper trailers – you will need a separate car insurance policy).

There are two types of home insurance cover:

  • Total replacement cover: This policy covers the entire cost of the replacement value after insured events occur.
  • Sum insured cover: This policy offers a pre-determined sum of the insured property towards repairs or rebuilding.

On the other hand, contents insurance covers the contents of your property, including furniture, appliances, electronics, and jewellery. You can get these policies as separate or combined home and contents insurance premiums.

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Apply online to get a free recommendation with real rates and repayments.

What Is the Difference Between Home and Contents Insurance?

The major difference between home and contents insurance is that a home insurance cover protects the bricks and mortar of your property, including the walls, roof and floors. A contents insurance policy is for the items inside the property.

Generally speaking, you can tailor your home contents insurance policy to suit your home. Some home insurance providers automatically include valuables, but you may need to pay a premium with others.

Making Sense of the Australian Home Insurance Market

What Different Home and Contents Products Are Available?

Home and contents insurance are broad terms to cover a range of insurance products available, such as building insurance, portable contents insurance, landlord insurance, renters insurance, and flood cover.

The type of insurance policy you take out depends on your property, purpose, and location. For instance, an Aussie expat with an investment property might need building insurance and landlord insurance.

Building Insurance

Building insurance refers to various products and policies that cover the home, each suited to a different purpose. Typically, this type of insurance will only cover the physically permanent aspects of the property – like home insurance. The sum insured might include driveways, garages, carports, in-ground pools and granny flats.

Depending on your policy, insurance doesn’t necessarily cover your property in case of all events. Your policy details will define what an ‘insured event’ is and what the policy covers.

Strata insurance is a type of building policy aimed at units or apartments. If you purchase a flat within a strata complex, it might already have a strata insurance policy included in your state fees.

Portable Contents Insurance

Does contents insurance cover your possessions when you take them out of the house? Whether you take your laptop and phone to work or travel with your valuables, portable contents insurance covers your personal possessions outside the property.

Portable contents insurance might be part of your regular home and contents insurance, but many providers ask you to take out a separate policy. As an expat, if you take your personal effects abroad, you must let your insurance provider know.

Landlord Insurance

Landlord insurance is similar to building-only insurance policies, but the added cover of repairs to accidental damage caused by tenants. Each landlord policy is different, and many insurance providers have changed their policies since the Covid-19 pandemic. Get in touch with your insurance provider to check what it will cover.

A landlord insurance policy is a good idea for property investors. While you can deduct deposits from tenants who mistreat or damage your property, an insurance policy will add additional security.

Renters Insurance

Renters’ insurance protects tenants’ belongings. As a form of contents insurance, it does not insure the building (as landlord’s insurance does) but the tenant’s personal possessions within the building.

If you’re renting a property, you must have renters insurance. Damaged or stolen possessions could cost thousands of dollars to replace.

You might not think you own much, but when was the last time you took stock of your belongings? The average household in Australia’s assets value equals $731,100. Without adequate renter’s insurance, you might lose a large sum.

Landlords should also encourage their tenants to look at their home insurance cover options.

Making Sense of the Australian Home Insurance Market

Storm, Flood and Fire Insurance

Australia is home to more than its fair share of natural disasters. Our weather climate means we enjoy brilliant summers but risk exposure to heatwaves, bushfires, droughts, floods, severe storms, tropical cyclones, earthquakes, tsunamis, and landslides. Storms, flood, and fire insurance will protect your property from potential disasters.

Check with your home insurance providers as to whether your basic cover includes a storm, flood, and fire combined home insurance. Not all providers include natural disaster or flood cover without additional charges, depending on your location and risk level.

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

What Does Home and Contents Insurance Cover?

Each insurance company and policy is slightly different. However, most policies will cover your property in case of damage or loss due to a predetermined list of causes. Some policies might also cover you for:

  • Fire and explosion
  • Flood
  • Storm and rainwater
  • Lightning
  • Accidental damage to glass or ceramics
  • Earthquake and tsunami
  • Theft or attempted theft
  • Vandalism and malicious damage
  • Impact damage (such as falling trees)
  • Burst pipe

Some policies might also cover accidental damage during everyday life, particularly valuables. However, you might have to pay a premium for this optional extra.

Additional covers include:

  • Rebuilding costs: Including architect fees or applications for building regulations
  • Debris removal and demolition: Check whether your providers include this in the sum insured or an additional cost to insure
  • Environmental upgrades: Installing water tanks or solar panels.
  • Electric motor burnout: If your fridge or washing machine breaks, some policies might cover the entire cost of replacing the appliance and spoiled foods or medications.
  • Moving house: If you have to leave your home, your home insurance policy might cover the overlap between properties and protect assets in transit
  • Visitor’s contents: Up to a few hundred dollars
  • Vet bills: Some home insurance deals cover pet insurance if your animal injures themselves or falls ill. However, you can usually claim a lot less than a separate pet cover allows.
  • Temporary accommodation: If you cannot live in your property after an insured event, home and contents insurers cover the cost of temporary housing. For renters, this means paying additional rent to move into a similar property.

Does Home Insurance Cover Valuables?

Contents insurance might cover valuables against specified risks, such as theft, damage while in transit, or natural disaster. You might have to pay higher premiums to access this kind of cover.

Making Sense of the Australian Home Insurance Market

Why Take Out Home and Contents Insurance?

While you might think that theft or floods may never happen to you, there’s no real reason that your property is risk-free. Home and contents insurance policies offer financial protection in the event of the unthinkable. Whether or not you live in a disaster-prone area, paying between $1,000 and $3,000 a year is worth the cost.

What Type of Home Insurance Do I Need?

Not everyone needs the whole package. Depending on where you live and the value of your property and belongings, you may need anything from the top home insurance premiums to basic cover.

Building cover is crucial if you own your house (or have a mortgage on your property). Renters won’t need to worry about this; building cover for investment properties is the landlord’s responsibility. If you own a strata unit, the strata plan should include building cover.

On the other hand, everyone should invest in contents insurance. You can buy an insurance policy just for yourself or for everyone in the property (e.g. in a shared house). Similarly, you can purchase separate home and contents insurance. However, many insurers offer discounts for a combined policy.

How Much Will My Policy Pay Out?

It is the insurance company’s legal liability to pay out if you make a claim. The amount the insurer will payout depends on your type of police.

  • Sum insured policies pay claims up to the specified amount on the agreed insurance policy. When you take out a policy, you will nominate how much cover you will need (i.e. the cost to replace your home and contents). Very few insurers will pay the total fee; you’ll agree to a home insurance excess which you pay before the company pays out any money.
  • A safety net policy means that the insurance company will pay a specified percentage (up to 30%) above the sum insured amount.
  • Total replacement policies will pay the total cost to repair, replace, or rebuild your home for all insured events. Generally, most insurance companies only offer a total replacement for buildings, not contents. These policies also don’t include agreed exclusions, e.g., flood cover.

Most insurance policies are ‘sum insured’ home insurance covers, but ‘safety net’ policies are increasingly popular.

How Do I Find the Best Home Insurance?

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

While it’s vital that you have adequate home and contents insurance, you don’t want to overpay for an insurance policy. In an ideal world, you only pay for each likely insured event. Here are some tips to get an affordable home and contents insurance policy and help your financial situation.

  • Shop around: Just like when you purchase your house, you don’t settle for the first property you see. Research your contents insurance policy online and check out offers from three different competitors. Compare home and contents sum insured with other companies.
  • Increase your excess: Even a slight increase in the excess might lead to significant savings on your home contents insurance.
  • Switch providers: New customers typically get cheaper premiums than renewing customers. Compare the renewal price against other offers for new customers.

Combined policy: Combining home, contents, and flood cover into one policy might result in discounts. Consider if you can also include your car insurance policy, pet insurance, travel insurance, and other policies for a cheaper deal. However, ensure each policy suits your needs before combining.

Making Sense of the Australian Home Insurance Market

How To Choose Home and Contents Insurance?

The most affordable home contents insurance might not be a perfect choice. Just because you save money on your year’s premium, you might lose huge sums if your flood cover or the sum insured doesn’t cover your property adequately.

To ensure your home contents insurance suits your needs, check out the relevant product disclosure statement PDS and target market determination of your contents insurance policy online. Speak to your general insurance company about their products and legal liability.

How Much Does Home and Contents Insurance Cost?

The total cost of your home contents insurance premiums depends mainly on the risk of damage or destruction and the value of your property. Plus, the level of cover affects your premium costs.

Factors that may affect your premium costs:

  • Whether you are covering your home and contents separately, covering only one, or taking out a combined policy
  • The total sum insured amount or total replacement cover amount
  • If you add an optional cover, such as accidental damage, pet insurance, or flood cover
  • Excess amount
  • Claims history
  • Location – e.g., high crime rate or disaster-prone
  • Security features

Although it differs between states, most insurance policies cost between $1,000 to $5,000 for both home and contents insurance.

Best Home Insurance Australia

The type of home insurance cover you opt for depends on your personal circumstances and financial situation. Landlords and renters won’t need both home and contents insurance, but owner-occupiers might want to take out a combined home and contents policy.

Making Sense of the Australian Home Insurance Market

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.

Frequently Asked Questions

Which Insurance Company Is Best at Paying Claims Australia?

According to Insurance Watch, CommInsure accepted the most insurance claims from their customers in 2021. The industry average of accepted claims is 95%. Other insurance companies with high rates of paying claims are AMP, NobleOak, and Westpac.

How Do I Get the Best Homeowners Insurance Value?

Ensure you shop around and compare home insurance quotes from different competitors. Some offer discounts for combined home and contents insurance or to new customers. However, the best value home insurance isn’t necessarily the best choice for your property – make sure your policy covers the building and your belongings adequately.

What Is the Most Comprehensive Home Insurance?

Combined total replacement home and contents insurance comprehensively covers your property and all your belongings. However, the most comprehensive policies also have the highest premiums. Consider the risk level to your property and how thoroughly you need to protect your home and assets.

Can I Get Cheaper Home Insurance?

If you’re struggling to pay your home insurance premiums, consider whether you can increase the excess. This is the amount you pay before the insurance company pays out. While it might mean you pay more in the event of something happening, your year’s premium should reduce. Additionally, installing security cameras around your house might lower your premiums.

Is Home Insurance Mandatory in Australia?

Home insurance is not mandatory in Australia. However, many mortgage lenders require homeowners to take out home insurance on secured properties. If you own your home and do not have a home loan, it’s still sensible to take out insurance.

Get a free Australian mortgage assessment today.

Apply online to get a free recommendation with real rates and repayments.
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