What does home and contents insurance cover?
Home and contents insurance protects your home and belongings from damages from a variety of causes. Different insurance providers will have different range of coverage on their policies. You will need to carefully read through the terms and conditions of your provider to find exactly what form of damage you are covered against. Here is a selection of things you might be protected from, but this list is not comprehensive, nor will every policy cover all of the below.
Particularly relevant for Australians, many home and contents insurance policies will cover damages from storms or fire. Flood damage cover is normally also available, but often as an optional extra. Flood damage insurance becomes much more expensive in areas particularly susceptible to flooding – North Queensland is a prominent example. Properties in rural Australia might also attract more expensive premiums because of bushfire risk.
Theft and vandalism
Some policies will cover losses due to theft or vandalism. However, this normally comes with several qualifications. Insurers may not pay out if the intrusion occurred through an unlocked door, if the thief or vandal was invited into the house or even if the house had been left unoccupied for more than 60 days. You’ll want to look carefully at your policy to work out exactly when you would be covered in these instances.
Home and contents insurance will usually cover you against impact damage. The most common impact damages are caused by falling trees, or if a car careens into your property.
What doesn’t home and contents insurance cover?
Policies are rarely completely comprehensive. Damages caused by the below tend not to be covered by home and contents insurance (although again, this will vary between providers).
Home and contents insurance does not normally cover damages caused by insects and animals. This includes structural damage caused by termites.
Damage from renovations
If the cause of the damage to your home or contents is from renovations, most policies will not cover it.
Movement of the sea
Home and contents insurance also doesn’t usually cover damages caused by movements of the sea. For it to be covered, it usually needs to be directly tied to an event such as a storm or earthquake. This essentially means if you bought a beachfront property and large swell eroded the beach and got into your home, you might not have grounds to claim.
What is building insurance?
A comprehensive home and contents insurance package covers both the structure of a house itself and its contents. Some providers though break this down, into home building insurance and home contents insurance. Building insurance only covers damages to the structure of the building itself, not its contents. This includes the house itself, garages, fences, even fixtures like showers, baths and toilets.
What types of building insurance are there?
Home buildings insurance
Home buildings insurance is a policy that covers the structures of a house, but not its contents. This would mostly be used by people who own the house in which they live. Home building insurance typically will have similar coverage to home and contents insurance packages: natural disasters, impact damage and theft and vandalism are covere; insect or renovation damage are not.
Strata insurance covers communal fixtures in shared buildings like apartments or office blocks. If you live in any building where you pay body corporate fees, some of this money is probably going on strata insurance. It covers walkways, stairwells, driveways, swimming pools, public liability, and major structural defects or damage, among other things.
Landlord insurance is normally a comprehensive package taken out to protect an investment property. It typically will cover everything on a property belonging to the landlord, including all fixtures. Landlord insurance is unique in that it usually covers rodent or insect damage on top of the usual protections.
What to consider when comparing insurance packages
What type of insurance you need
Depending on your living situation, a different type of home insurance will suit you. For example if you are renting, you do not need building insurance as you do not own the property or any of the structures on it. You might choose to just take out a home contents insurance package to protect your belongings.
Further, if you have modestly furnished your home with secondhand furniture and tend not to have expensive items such as cameras, computers or sound systems, you might consider contents insurance to be not worth it. However, it doesn’t take much to rack up thousands of dollars’ worth of damage, so having an emergency fund or ‘self insuring’ can still be worthwhile.
Range of coverage
The above is just a rough guide to what the average package covers. When choosing your own insurance, you will want to carefully go through the terms and conditions to see exactly what you are covered against. You’re looking for a package that covers everything that could viably happen to your home or contents, but don’t want to pay over the odds for something unlikely to happen. For example, it might not be worth paying extra for cyclone cover if you live in Tasmania, or snowstorm cover if you live in Townsville.
The amount you will pay for your insurance package depends on a range of factors. The value of your property, the area you live in, your age and your home security are just some of many factors that will influence how much you are quoted by insurance providers. It’s a good idea to get several different quotes before you choose a policy.