Do I need to get homeowners insurance liability coverage?

Do I need to get homeowners insurance liability coverage?

Imagine this: You've got a great party going on at home, when suddenly, without any warning, a guest slips on the wet floor near the swimming pool and the fall results in a few broken bones. As you rush to help, the thought of you being held legally responsible probably doesn’t cross your mind. But unfortunately, you could potentially be found legally liable for your guest’s accidental injury while on your property.

Most Australians have home and contents insurance that protects their home and their belongings against unforeseen damages. With this insurance you can be sure that your home and possessions are all well-protected, but does it protect the people who visit?

Whether it’s a friend, a colleague or even a tradesperson, if someone gets injured or falls sick whilst on your property, you’re legally liable. As such, you could end up paying a considerable sum of money in personal damages. You cannot prevent an accident, but you can prevent yourself from incurring considerable costs in the event of an accident by being insured for legal liability.

Will home insurance public liability cover pay for personal injury?

Besides protecting your home and its contents, did you know that home insurance also offers another type of cover called legal liability home insurance? This an important but relatively unknown inclusion to home insurance policies worth investigating.

This insurance cover safeguards you and your family members from any legal liability if someone – your friend, your neighbour, or a visitor – gets hurt on your property. This cover also protects you if you or a family member injures someone else outside your home unintentionally. Additionally, with legal liability home insurance, you and your family members are protected against being liable for loss or damage to someone else’s property as well.

Typical liability claims include injuries due to slips and falls in your home or elsewhere on your property. If a tree or a branch from your property falls and causes damage to your neighbour’s garage, home or parked car, the policy covers you for this too.

Another fairly frequent home insurance public liability claim is dog bites. If your dog bites someone and you’re proven liable, the vet and medical bills will be taken care of. If your dog were to get into and damage someone else’s property, this insurance would cover that also.

Some legal liability home insurance policies cover you not just for accidents that take place at your property, but also for ones which happen anywhere in Australia. Some even cover you if the incident happens in New Zealand or worldwide as long as you reside in Australia. You could be away on holiday and playing tennis when a shot accidentally breaks your opponent’s nose. Your insurer would still cover you for any costs.

Some insurers might also offer you optional cover for domestic workers compensation. This takes care of accidents that might occur while you have people working for you on your property. This cover, however, is only available in some states. Of course, many tradespeople and subcontractors often have their own liability insurance – whether self-bought or through their employer. It’s still a good idea to include this cover if your home is being renovated or repaired.

The insurance automatically includes every member of your family that resides in the property the insurance policy is covering.

Is there a liability limit on home insurance policies?

Your home and contents insurance will take care of most of your legal liabilities, and your level of liability coverage is generally more than enough. Most policies in Australia usually include a considerable legal liability cover, often in the range of $10 million to $20 million. This amount is dependent on your insurer and your policy, so check the Product Disclosure Statement (PDS). This cover protects you against any financial expenses that arise from any illness, injury or death suffered on your property by somebody who doesn’t live there. It also covers any loss of or damage to their property.

What does legal liability home insurance not cover?

While a home insurance policy that includes legal liability is quite comprehensive, there are still a few situations where legal liability won’t cover you. These include:

  • Damage to your own property
  • Injury or property damage to any people who reside with you
  • Liability while under a rental or lease agreement
  • Claims that are from your business or trade

Each insurance company has a different view on inclusions and exclusions, and those depend on the policy. Always read the PDS of your chosen policy to ensure that you are fully aware of precisely what is covered.

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Learn more about home insurance

What is home insurance?

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. 

Do I need home insurance for a home loan?

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.  

Type of home insurance do I need?

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. 

Can you transfer home insurance?

When you sell your home, you cannot transfer the home insurance policy to the new owner. The buyers need to purchase a new home insurance policy where the insurer will calculate the premium based on several factors.

The risk of any damage to the home is transferred to the new owners when you sell the property. You can speak to an experienced conveyancer or solicitor to find out more about when the risk gets passed to the buyers in your state or territory.

If you move to a new home

Can you transfer home insurance to a new property if you move to a new home?

Some insurers may allow you to transfer your policy to a new property as long as you meet certain conditions. These include informing the insurance company as soon as you enter into a contract to buy the new home. You may need to pay an additional premium when transferring your existing home insurance policy to the new property.

How much is home insurance?

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.

Do I need home insurance?

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.

How to cancel your ANZ home insurance

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.

Do I need legal cover on home insurance?

Besides protecting your home and your possessions from damage and theft, many home insurance policies also cover unfortunate accidents that sometimes result in legal action. This is called home insurance legal cover.

What does it cover?

This type of insurance cover protects you and your family members from liability if someone gets injured on your property. You can also get coverage for scenarios such as you or a family member accidentally injuring someone else outside your home or accidentally damaging someone else’s property. 

Typical liability claims include slips and falls in your home and the ensuing medical expenses, or falling trees or branches that cause  damage to your neighbour’s home or parked car.

Dog bites are another claim often covered. If your dog bites someone and you’re found liable, you’ll be covered for the vet and medical bills. Similarly, if your dog damages someone else’s property, home insurance legal cover will often take care of your liability.

Every member of your family is usually automatically included in home insurance legal cover provided they live with you.

Does home insurance cover tenant damage?

If you have a property that you rent out to tenants, you may ask, does home insurance cover tenant damage? Generally, as a landlord, you’ll require a different type of insurance policy than a regular home and contents insurance that offers coverage for the unique situations faced by landlords.

Landlord insurance

As a landlord, you must insure against additional risks to protect your investment. A landlord home and contents insurance policy covers loss due to natural disasters, storm, and fire. Generally, it also covers fixtures like stovetops, light fittings, window coverings, carpets, and ovens.

Additionally, you may protect yourself against any loss arising due to damage to your property caused by your tenants or their guests. Some landlord insurance policies may also protect you against financial loss due to unpaid rent.

Does homeowners insurance cover tenant damage? In most cases, regular homeowners’ insurance policy will not cover such damage. It’s always best to refer to the product disclosure statement (PDS) to clearly understand what is included and excluded from your home insurance policy.

What does home insurance cover?

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.

Does home insurance cover accidental damage?

Home insurance offers cover for any damage to your house and most policies cover the main building, garage, permanent attachments, and other external buildings that can be locked. 

Every insurance policy lists the defined events that will be covered, such as fires, floods, lightning strikes, theft, or falling trees. A few may also offer the option of accidental damage home insurance cover for other possible mishaps and unintentional damage around the home, such as when the dog knocks over the TV, or when red wine is spilled on the carpet.

The home insurance accidental damage cover is available only for the address provided at the time of buying the policy. 

Is my home insurance covered for weather damage?

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.

What is a home insurance premium?

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. 

Are bikes covered under home insurance?

Ordinarily, home insurance only covers damage to your house, which can include additional buildings such as garages, sheds, and fences, as well as permanent fixtures. 

However, to protect the items located in your home or in any of these other buildings, you will likely need to purchase home and contents insurance. Even so, your bike would only be covered if it does not require separate vehicle registration, as is the case for bicycles and 50cc minibikes, but not motorcycles, and only when located on your property, parked or otherwise. 

Depending on the cost of your bicycle or minibike, you can have it listed in your home and contents insurance as a high-value item. You'll want to check your insurer’s Product Disclosure Statement (PDS) to know the normal coverage limit for a bike included as part of your home and contents insurance, as well as the incidents which are covered. 

Insuring your bicycle can be distinct to insuring any personal effects on your bike at the time, or even using the bike when you're out and about. If you want to cover those, such as something in a basket or a camera equipped to the bicycle, or the bike itself as you travel, you will likely need to purchase additional personal effects insurance. You can also read about any additional coverage available under the personal effects policy, though for full coverage, an ideal option will likely be a separate bike insurance policy.