Many Aussies would know that buying a home insurance policy can minimise stress about paying for potential home damage, especially after a major disaster.
However, there are other benefits - and potential risks - that may not be as well known. That’s why it’s important to look at the Key Facts Sheet or the Product Disclosure Statement (PDS) put together by your insurer for the policy you’re buying.
You may find other things home and contents insurance can cover beyond renovation, rebuilding, or replacement.
What are the typical advantages of home insurance?
Before plunging into the lesser-known aspects of a home and contents insurance policy, it may be useful to recap some of the key terms you’ll likely read in product documents.
- Insured events: These are the incidents which can cause damage to your property and are covered by the policy. Many home and contents insurance policies include coverage for fires, storms, lightning, hail, theft, vandalism, riots, and accidental leakage. You can often buy extra coverage for floods and accidental damage.
- Rebuilding your home after a disaster: Home insurance policies may cover either an insured sum - which you and your insurer agree is the cost of replacing your home - or the actual cost of rebuilding your home if it is damaged in an insured event. Damage to fences, solar panels, garages and sheds, and swimming pools will often also be covered.
- Replacing your valuables: If you’ve purchased contents insurance, either separately or as a combined policy with home insurance, replacing your precious belongings may be covered. However, you may need a separate policy for expensive items, or for items you carry with you out of the house.
- Excess and Premium: The excess is the portion you agree to pay out of pocket when you file an insurance compensation claim. While you’ll need to set aside savings for the excess, choosing a higher excess can bring down the premium, which is the cost of your home and contents insurance policy.
Does your insurer offer these benefits of home insurance?
The difference between home insurance or home and contents insurance offered by different insurers may boil down to the sweeteners of the policy’s coverage. Consider checking how your insurer addresses the following aspects of a home and contents insurance policy.
- Rebuilding costs: Some insurance providers may cover all the costs associated with rebuilding your home, which includes not just the cost of materials but also the fees you need to pay to an architect or a building contractor. If you need to use green materials or comply with green building regulations, any associated costs may also be covered by your policy.
- Removal of debris: Suppose a storm partially damaged your home and dumped a pile of wreckage on your property. Your insurance policy may compensate you for removing the damaged material - the debris - from your property.
- Temporary accommodation: Did you know that, depending on your insurer, up to a year of temporary accommodation may be covered in case your home needs to be rebuilt? What’s more, you could also get compensation for the cost of temporary housing arrangements for your pets. Check your insurer’s Product Disclosure Statement (PDS) for details.
- Legal Liability Coverage: Your home will probably see many visitors over the years, and you may be liable if they are injured in your home. As long as the injuries weren’t caused deliberately, your home insurance policy may cover your legal responsibility for others’ injuries in your home.
- Electrical appliances and electronics: If an insured event, such as a lightning storm or fire, causes a power surge or power outage, you may be able to claim compensation for damage to electrical items. Note that you’ll need to add on coverage for motor burnouts, which are also called fusion damage. Your LED TV, mobile phones and laptops may also be covered by your home and contents insurance policy, although you may need to check the limit of this coverage.