Owning a home comes with multiple new responsibilities, including protecting the property from damage as well as the contents. You can purchase home and contents insurance separately. Still, it may be smarter, both practically and financially, to buy a combined home and contents insurance policy.
You should remember that purchasing coverage for your possessions or contents requires you to consider different aspects than you would usually. For instance, you’ll need to consider the kind of care needed for some of the items you own and how this would impact if they’re damaged.
For this reason, your task isn’t simply finding the cheapest home and contents insurance policy but also considering how this cover will protect you.
What’s included in home and contents insurance?
The average home and contents insurance policy offered by Australian insurers gives you a choice between covering your home for the total replacement cost or a predetermined sum. The former is what it will cost to renovate or rebuild your home if damaged by a covered incident, while the latter is an estimate of this cost that you agree to with your insurer when buying the policy. These policies will also cover the theft of or damage to any of your belongings kept inside the house. This includes belongings such as jewellery, electrical appliances, furniture, and heirlooms.
The incidents often covered by most home and contents insurance policies are natural disasters like bushfires, lightning and hail storms, and earthquakes. If a storm causes a tree to fall on your property, the damage from that may also be covered. If you live in a flood-prone area, some insurers may ask you to buy optional flood damage cover. This may be the same if you live in an area prone to bushfires, so make sure to check the terms of the policy.
Damage from events triggered by humans such as theft, vandalism, and rioting is also usually covered. You should check if the policy covers accidental damage to your valuables, such as from somebody bumping against them, or if you need to buy additional coverage.
When do I need home and contents insurance?
Getting home and contents insurance is a personal choice, but you may be required to get at least home insurance during the home loan application process. If this is the case, it may make sense to also include contents insurance even if you don’t have any belongings in the property yet.
Outside of the need for insurance when purchasing a home, the decision comes down to your personal choice. All of us tend to be careful about preventing damage to our home or valuables, but some degree of risk always exists. The choice may simply boil down to unexpectedly facing an astronomical bill for damage caused by a disaster. It could also be that buying a suitable home and contents insurance policy will free you of anxiety regarding possible damage. Again, you may need to buy home and contents insurance if you’ve taken out a home loan, or if you have several high-value items inside the home.
You also need to make sure that you get a home and contents insurance policy that offers the necessary coverage. For instance, buying an insured sum policy may be cheaper, but the sum may not cover the full cost of rebuilding your home. Similarly, your policy may cover jewellery, but only up to, say, a couple of thousand dollars which may not even come close to the cost of your jewellery. There may be the option to buy additional or exclusive coverage for some items in such cases.
There are also situations and items that even the best home and contents insurance policy may not cover. Suppose you have a high-end laptop that you carry to work every day. You may need to buy personal effects cover, on top of your home and contents policy, since the laptop travels with you. There are also things like damage caused by wear and tear or by termite infestation that may not be covered as they’re considered to be caused by poor maintenance.
How much can home and contents insurance cost me?
Depending on where you live in Australia, your home and contents insurance policy can cost you upwards of $2,000 every year. However, on average home and contents insurance costs about $1,500 per year. Sadly, with the number of natural disasters increasing every year, the cost of insurance may go up even further.
You do have options, however, to help control how much you pay for home and contents insurance. The most direct option may be agreeing to a higher excess, which is the out-of-pocket expense you agree to pay when filing a claim with your insurer.
If you aren’t sure you’ll have the savings to manage a high excess, there are other ways to minimise it. You can reduce your premium by limiting the number of optional extras you choose to be covered for under your policy. You should also check whether the insurer will possibly offset your compensation claims before opting out of particular cover. to
Do this to ensure that you don’t underinsure some of your expensive belongings. You can also get the best price on your policy by comparing home and contents insurance quotes online. Comparing policies will help find a suitable policy at a more affordable price and if any insurance provider is offering special or discounted rates.