What does home insurance cover?

Jodie Humphries-08/12/2020- 4 min read

No one wants to be in a situation where they’re forced to file an insurance claim. But when life takes an unexpected turn, you may start wondering whether your insurance coverage can help. For instance, if there’s a hail storm and your roof is damaged, you may want your insurer to pay for the repairs, so you need to make sure your home insurance policy covers hail damage. You should remember that home insurance only covers the physical building that forms your home, and any sheds, garages, fences, or swimming pools on your property. You’ll need a separate contents insurance policy to cover the possessions inside your home.

While it’s possible to bundle your home and contents insurance together, many Aussies don’t realise that the two are separate policies. You should make sure you check the coverage and limits of each policy so that you know the level of financial protection you have. Particularly if you have contents that are of high value like jewellery because the insurer may not value it to the same amount as it’s valued. You can get individual policies for these high-value items to avoid them being underinsured on your overall policy. You can find out more about coverage limits, inclusions, and exclusions in the insurer’s Product Disclosure Statement (PDS).

List of things covered under the home insurance policy

If you own a home in Australia, buying home insurance is recommended. If you’ve taken out a home loan, the lender will likely require you to purchase home insurance before you move in. Depending on the insurer, having home insurance can also mean you have access to temporary accommodation while repairing or renovating your property after making a claim. Usually, home insurance will cover any damage caused by unpredictable incidents, whether natural or human. Most policies include the following kinds of coverage:

Fire damage insurance, which compensates you for damage caused by fire including bushfires and sometimes even the smoke and ash.
Theft and attempted theft covers any damage to your property caused by robbers breaking into your home.
Water damage covers damage caused by the bursting of storm pipes, or stormwater entering your home.
You should remember that seepage and leakage are not covered, while flood damage may only be offered as optional coverage.
Malicious damage, including vandalism and rioting, covers damage resulting from a commotion in your neighbourhood or attacks by vandals.
Hail storm damage covers damage to the roof or walls of your home caused by hail.
Lightning damage covers power surges and other damage resulting from a lightning strike. You may need additional fusion damage cover if any motor wirings are burnt, and not all types of electrical damage may be covered.
Accidental damage covers unintentional breakage of glass, ceramics, or sanitary fittings. Some insurers may ask you to buy additional coverage based on the items you have in the house.
Earthquake damage covers damage caused by tremors and earthquakes.
Tree damage covers the cost of repairs needed if a tree or its branches fall on your home.

What does home and contents insurance cover?

Home and contents insurance covers the personal possessions located inside your home in addition to the house and other fixtures. Your policy may cover items such as furniture, white goods, appliances, electronics and jewellery. Home and contents insurance policies may not, however, cover damage to or loss of belongings when taken out of the home or belongings of people visiting your home. Also, the coverage limit for various items can vary from policy to policy. A basic home and contents insurance policy may be more affordable, but the coverage is limited, so it’s best to read your insurer’s PDS.

As with home insurance, you can buy optional accidental damage cover and widen the financial safety net for your home’s contents. However, remember that wear and tear to any items aren’t part of most policies coverage. If any insured belongings are lost or damaged, you can file a claim with your insurer to cover the costs of getting the items fixed or replaced. If your claim is approved, the insurance company may either:

directly pay a contractor to repair or replace the covered contents; or
reimburse you the repair or replacement costs.

If you frequently carry personal belongings outside the home, consider buying the optional cover often referred to personal effects insurance. Some of the items that may be covered by a personal effects policy include your handbag, jewellery, camera and smartphone.

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Jodie Humphries

Content Writer

One of RateCity's Personal Finance writers, Jodie has worked for banks and comparison websites for a number of years, and now spends her time working on ways to make money make sense for everyone else.

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Learn more about home insurance

What home insurance specifically covers and the extent of the coverage depends on the insurance provider and the individual policy. However, home insurance typically covers the property and other permanent structures found on or in the property, such as fences, in-ground swimming pools, garages, and dishwashers, to name a few.

There are usually two types of homeowner's insurance you can choose from, with "total replacement cover" or "sum-insured cover".

If you’re not sure which option to take, it may be worthwhile to speak to a professional valuer to understand how much it might cost to rebuild your home and replace what's inside.

Your home insurance premium is what you pay your insurance provider for covering your home under their home insurance policy. It is calculated based on the type of coverage you choose for your home as well as any additional coverage you buy for either your possessions or specific incidents. Your premium can either be paid annually or in smaller instalments.

Your home insurance policy may cover the total replacement cost, which is the actual expense of rebuilding your home from scratch. Alternatively, it can cover an insured sum, which is a predetermined estimate of what it might cost to rebuild your home. You’re more likely to pay a higher premium for total replacement cover than for insured sum coverage.

Apart from selecting your coverage, you’ll have to figure out your excess, which is the amount you pay out of your own pocket for each insurance claim. If you are okay with paying a higher excess, your insurance premium may be lower. Conversely, if you choose a lower excess, you may pay a higher premium.

Your insurance premium can also be higher if you live in an area prone to incidents like floods, bushfires, or theft, as insurers are more likely to receive a higher number of claims in such neighbourhoods.

If you also want to buy insurance for your belongings, a combined home and contents insurance policy may have a lower premium than paying premiums on separate policies for your home and your belongings.

While home insurance isn’t necessarily a requirement for a home purchase per se, it’s likely that if you’re purchasing a home with the help of a home loan, you’ll need to take out home insurance on the property. Home insurance can be one of the factors required in the pre-settlement documentation for a home purchase, and you may be advised by either the bank or a broker (or both) ahead of settlement.

There are two types of house insurance policies, namely total replacement cover and sum insured cover. The former covers the total cost of rebuilding the house to the same standard before it was damaged. The latter home insurance type covers the cost of damages up to a predetermined limit, which is called the sum insured.

Different types of homeowners’ insurance may offer extra cover at an additional premium, including accidental damage, fire insurance, storm insurance, flood insurance, motor burnout insurance, home and contents insurance, and contents insurance. These extras are not classified as homeowners’ insurance types; include one or more based on your situation.

You can cancel your ANZ home insurance policy at any time by making a request in writing. The cover is discontinued once the insurer receives your cancellation request.

If you cancel the policy before the premium due date, the insurer will retain the amount for the duration in which it was in force. A proportionate amount of the premium is refunded for the period between the receipt of the cancellation request and the next due date.

You can also cancel ANZ home insurance during the cooling-off period, which is 21 days from the start of the policy. To cancel the policy, you should send a written request along with the schedule to the nearest branch before the end of the cooling-off period. However, if you have filed a claim during the period, the insurer is unlikely to refund the premium amount.

If you’ve inherited or purchased an old home, the house may have been built using asbestos. While it may not cause harm in sealed walls or ceilings, exposure to loose asbestos dust can cause serious health issues. Although the Australian government completely banned using asbestos-based building materials in 2003, houses built earlier may also have asbestos in the cladding or the ceiling for insulating and fireproofing.

Many home insurance policies do not cover asbestos removal. However, in some circumstances, insurers may still pay for its removal. For example, hail storms or falling trees can damage the roof or the walls of your home, causing the asbestos to become more likely to release fibres. If your home insurance covers hail storms or tree damage, your insurer may pay for asbestos removal. Having said that, a better option is to check with an insurance company to see if they cover asbestos removal before purchasing their home insurance policy.

In general, when living in an old home, you need to take precautions to make sure you don’t accidentally cause asbestos materials to crumble. You should also plan for regular maintenance to prevent wear and tear to any areas containing asbestos.

You may have purchased a Budget Direct home insurance policy, but changed your mind and now wish to cancel it. You can do this at any time after your purchase, even if you’ve made a claim.

To cancel your Budget Direct home insurance policy, you can call 1800 182 310. If you cancel before the 21-day cooling off period, you’ll receive a full refund. If you pay annually and choose to cancel after the 21 day cooling off period, you will be charged an early exit fee of $40. However, you will also receive a pro-rata refund of your unused premium.

If you pay monthly or fortnightly, you won’t be refunded any of your previous payments, but you also won’t have to pay a cancellation fee when you cancel.

The most common causes of structural damage to a property include foundation issues such as settling or ground shifting, hidden structural damage, such as caused by termites, or weather-related damage, like by a tornado or hurricane.

If you’re wondering if structural damage is covered by homeowners insurance, you’re probably not going to like the answer. Most insurance providers don’t include structural damage in home insurance policies because they build the polices to offer protection from loss due to sudden, accidental events, such as fire, burglary or weather-related damage. It can take months or even years for you to discover most foundational or structural damage to your property, and by that time, they become rather costly to repair.

Since it takes a long time to detect, most structural damage is considered a maintenance issue and therefore, your home insurance policy won’t cover it. However, all is not lost. Once you locate the damage and take the necessary steps to not only repair it but also prevent further harm, your insurance policy might cover any subsequent loss. For example, if the foundation has cracks, and it lets water into your home, the water damage could be covered by insurance, but the cracks themselves would not be.

If your home is damaged, say due to a fire or a storm, your first thought may be to file a claim for the repair costs.

You may later realise that the claim is too small and not worth the effort of filling in the paperwork and losing any no-claim bonus. Instead, you may think ‘I’d like to withdraw the claim’.

In this scenario, you can simply tell your insurer that you wish to cancel your claim. Keep in mind when you withdraw the claim, it often continues to remain on the insurer’s records, but with no payout recorded.

You may wish to withdraw your home insurance claim for several reasons. You may realise the damage is minor and the repair cost is close to or less than the excess. The excess is the amount you agreed to pay on top of your insurance payout.

Before making a claim, it’s important to understand it may increase future premiums and also affect your ability to get insurance later.

So in summary, when asking “can I withdraw my home insurance claim?”, the answer is yes. However, before making a claim, it may be worth looking at if it is worth it.

How much your home insurance could cost and the amount of premiums you pay will depend on many factors, including the amount you need to cover, the excess you're willing to pay, and what type of cover you want to take.

It's important not to base your insurance policy decision solely on the premiums being charged, reviewing what the policy covers, its features, claim exclusions, and caps when deciding which home insurance policy is the right one for you.

For homeowners, home insurance can provide some financial protection to your property when things don’t go as planned. If you have home insurance and your property is damaged (or even the permanent fixtures inside), you could make a claim to your insurer to cover the costs of getting it fixed, replaced or rebuilt.

The idea behind property insurance is that you pay insurance providers to take on the risk of loss or damage to your property that you would otherwise be carrying.

While homeowners' insurance is not legally required, it’s an option for those who want financial protection for their property. Some mortgage lenders may even require borrowers to take out home insurance.

If storms are among the incidents covered by your home insurance policy, hail damage protection is more than likely assured. While all policies differ based on your needs and what a home insurance provider will offer, some things are close to a certainty.

Extreme weather events tend to be unpredictable in their severity, but dangerous all the same. You'll never be able to fully prepare for any damage caused, be it lightning, strong winds, rain leading to flooding, or hailstorms, but home insurance can at least provide you with a way to deal with life's unpredictable nature.

If your home suffers from hail damage, you can file a claim with your insurer. In the event that this happens, remember to take pictures of any hail damage as an insurance adjuster will need to evaluate the impact on your home. Any additional wind damage to your roof will also need to be documented similarly.

You may want to check if your home insurance also covers hail damage to the cars parked on your property, and then file the claim for the total damage caused by the hailstorm. Once your claim is approved, your insurer should offer you either a cash settlement or refer you to a network vendor for the necessary repairs.

It is important to understand what is covered and what isn't covered in your home insurance policy before purchasing it. One crucial point to consider at the time of evaluating home insurance policies is whether it includes home insurance weather damage cover, and what it actually means if it does.

Typically, the protection afforded by home insurance actually depends on how the home was damaged or affected by conditions. The whole idea behind home insurance is to protect you from loss or damage against an unexpected, sudden event, like a fire or storm. If your home was in the way of a storm and your roof was damaged, which also caused internal water destruction, you may be covered for the damage to the roof and the property. The same holds true for walls or a fence that got damaged in a storm or flood.

However, you may not be covered if the damage occurred because your property was not well maintained and your home suffered a leak. A poorly maintained fence is less likely to be covered by home insurance.