What Insurance Should Home Buyers Get?

What's Next After Buying Your Home? Essential Insurance Tips for New Homeowners

Congratulations on your new home! After the excitement settles, it’s essential to ensure that your new asset and your financial well-being are adequately protected. Reviewing your insurance coverage is a critical first step. From life insurance, income protection, and total permanent disability insurance to the essential home and property insurance, getting the right protection matters.

But with so many insurance products in the market, where should you start? And how do you know what’s best for your unique needs?

Before we proceed, here is the mandatory disclaimer. This article is meant as general advice only. It is not any form of financial advice, and does not take into account your own personal circumstances and your own personal needs. You should always seek qualified financial and insurance needs advice from a licenced financial advisor or insurance broker, to determine if the right type of product and the right level of cover suitable for you.

With the disclaimer out of the way, let's start.

The Basic Property Insurance Essentials for New Homeowners

When you purchase a new home, securing the right property insurance is crucial to protect your investment and personal belongings. Here’s a rundown of the basic types of property insurance you should consider:

What is a Home Building Insurance?

This insurance covers the costs of repairing or replacing your home's physical structure. While price is important, it’s essential to focus on coverage details, such as what is and isn’t included. Typically, it covers the building and fixtures (like plumbing and cabinetry) and may also include legal costs if someone is injured on your property.

What is Content Insurance?

Contents insurance protects your personal belongings and household items, like furniture, electronics, and jewellery. Many insurers bundle this with home building insurance, often providing a slight discount.

What is Home and Content Insurance?

As the name suggests, Home and Content Insurance combine both building and contents insurance into a single policy, this option offers comprehensive protection for your property and possessions, often at a better rate than buying separate policies.

What is Landlord Insurance?

For investment property owners, landlord insurance is designed to cover events affecting your rental income or property condition, such as tenant damage, non-payment of rent, or storm damage. Some policies may include building and contents coverage for items within the property.

What is Title Insurance?

Title insurance protects you from unknown risks that may compromise your ownership, especially for established properties. For example, if you discover unapproved modifications on the property after the purchase, title insurance can help cover rectification costs.

What do you need to know when you buy Home Insurance?

Before you buy your home insurance, here are some key factors you will need consider:

1. Replacement Value. Understand the cost to repair or rebuild your home to its original standard. Replacement value should cover the full cost to restore your home after a total loss, including labour, materials, and any upgrades or special features.

2. Home Construction Details. Insurers need specific information about your home’s construction to accurately assess risk. Provide details like the year it was built, materials (full brick, brick veneer), and any renovations or extensions.

3. Excess Amount. The excess is the “co-payment” you’re responsible for when you make a claim. Higher excess can reduce your premiums, but make sure it’s affordable in the event of a claim.

4. Flood Coverage. Verify if flood coverage is included and review how “flood” is defined by your insurer. Some policies cover any water damage if water enters the home, while others have strict definitions that exclude certain types of flooding. This distinction can greatly impact your coverage.

5. Policy Exclusions. Review what’s excluded from the policy. Common exclusions include damage from war or terrorism. Budget policies might exclude certain natural disasters, so ensure you understand all limitations. Policy Exclusions can also be dependent on the property address. EG, if the property is in a known flood zone, and you had chosen not to include flood cover, there could be a stricter exclusion policy for any water damage.

6. Read the Product Disclosure Statement (PDS). The PDS outlines policy definitions and details. Familiarise yourself with key terms—your understanding of “damage” or “loss” may differ from how your insurer defines them, which affects coverage.

What do you need to know when you buy Content Insurance?

Securing content insurance can protect your belongings, but it’s essential to understand what’s covered and any policy limitations. Here’s a quick guide:

1. Replacement Value. Ensure the policy covers the full cost to repair or replace insured items at today’s prices.

2. Excess Amount. This is the amount you pay if you make a claim. Higher excess can lower your premiums but ensure it’s affordable when needed.

3. Definition of Loss. Each insurer defines “loss” differently. Be sure your policy covers the type of loss you envision (e.g., accidental damage, theft).

4. Exclusions. Review policy exclusions. Common exclusions include acts of war or some natural disasters. Always read these limitations carefully.

5. Portable Device Coverage. Some policies cover portable items like phones and laptops, even when taken outside your home. Confirm if your policy includes this benefit.

6. Motor Fusion Coverage. This covers electrical devices’ motors, like fridges, against breakdown. Check if your policy includes this handy feature.

7. Read the Product Disclosure Statement (PDS). Definitions and terms vary by insurer. Make sure you understand all definitions and terms to know precisely what’s covered.

What do you need to know when you buy Landlord Insurance?

Landlord insurance protects investment properties, but each policy varies. Here’s what you need to consider:

1. Excess Amount. Check the required co-payment for claims. A higher excess can lower premiums but may mean more out-of-pocket costs at claim time.

2. Rental Loss Definition. Policies vary in defining “rental loss.” Ensure that your policy covers the types of loss relevant to you, like tenant non-payment or damage-related vacancy.

3. Exclusions. Exclusions often include damage from war, and some policies might also exclude natural disasters. Read the fine print to understand potential gaps.

4. Read the Product Disclosure Statement (PDS). This is where you’ll find precise definitions and coverage details. Ensure you fully understand what the policy does and doesn’t cover. Reading the PDS and understanding each term are critical steps to securing the right insurance policy tailored to your specific needs.

What insurance do you need?

The type of insurance you need depends on your situation. This table summarises the minimum you will need, depending on whether you are a home owner, landlord or renter:

Your Role	Home Insurance	Content Insurance	Landlord Insurance
Home Owner	yes	yes
Landlord			yes
Renter		yes

What do you need to know when shopping for insurance?

With so many insurers offering home, landlord and content insurances, what do you need to know before you buy one? First, get quotes from more than one insurer. They are usually free. Find the best value and coverage that suits your needs. Compare the Key Fact Sheets of different policies. If you want more detail, read the product disclosure statement (PDS).

There are some comparison websites which claims to help consumers choose the right insurance, but do be aware that they are businesses and may make money through promoted links. They are like insurance brokers, their advice might not be 100% neutral, and may be influenced by promotions, commissions and rebates from the insurance providers. They also do not compare ALL the available insurances in the market, thus, you might miss out of better ones, simply because they do not have any commercial referral agreements with these comparison websites. So, keep these in mind when using comparison websites.

After receiving quotes from the insurers either directly or via the comparison websites, compare these key features:

Premium	Cost for similar cover
Excess	Amount you have to pay when making a claim Options to reduce your premium, usually by paying a higher excess Options to reduce your excess, usually by paying a higher premium
Exclusions	Items and events not covered Check for exclusions, caps, limits or other conditions Check for definitions of the events in the Product Disclosure Statement
Legal Liability Cover	Cover for injury to other people and their properties at your home. Some insurer might call this Public Liability Insurance
Extended Cover	Adds extra to the sum-insured so you're not underinsured if there’s a total loss
Cover Limits	Maximum limit on how much you can claim for covered items
Definitions	​Definitions of various events and terminologies
Flood and Natural Disaster Cover	Read and understand the definition of flood, water overrun, etc. Different insurers have different definitions for flood and water damage. Some may call this "acts of God".

Now that you have a better idea of what to look for when shopping for your home, content or landlord insurance, it's time to start shopping.

Have a chat with our buyers advocates if you have any queries. While we are not able to provide any specific insurance advice, we know professional insurance brokers who are able to help you find the best cover for your needs.

More home and investment property buying news and tips here.

Disclaimer:

This article is meant for general consumption only. It is not in any ways a financial advice, and does not take into account your own personal circumstances. You should always seek qualified financial and insurance needs advice from a licenced financial advisor or insurance broker, to determine if an insurance product is suitable for you.