If you’re applying for a home loan, it is typically a requirement that you take out home insurance on the property. Home insurance is often a requirement for full loan approval, and you may be advised by the bank or your broker to purchase home insurance for the property ahead of settlement. Also, if you are considering refinancing and you currently do not have home insurance, you may need to purchase a policy to gain approval from a new lender that requires it.
If you’re purchasing a unit, townhouse, or similar property, the strata corporation that manages the complex may already have insurance in place covering damage to the structure, partially paid for by your strata fees. This may be enough to satisfy your bank or mortgage lender, so you may not need to take out a separate home insurance policy to get a home loan on a strata property.
If you are building your home, keep in mind that your builder is also required to take out a home warranty insurance policy for significant contruction projects. It’s known by different names in different states and territories, and its exact requirements may also vary. While it’s your builder who will take out and pay for home warranty insurance cover, the cost may be passed on to you in some instances.
Home insurance is understandably also valuable if the worst were to occur. For example, if you were to lose your house in a fire, home insurance may cover the some or all of the cost of rebuilding, as well as other expenses such as temporary accommodation for you and your family. But unless you also had contents insurance, you’d have to pay for replacing your treasured possessions yourself.
Home and contents insurance may also help cover a wider range of options than home insurance alone. If your home experienced a break-in, your home insurance may only cover the cost of broken windows or busted locks, while the contents insurance may allow you to replace your stolen possessions, new for old. This invaluable safeguard may help to ensure that you won't be left out of pocket when you need it the most.
Of course, you may still choose to take out a contents insurance policy to protect the possessions in your strata property, as this likely won’t be covered by your strata’s insurance over the complex.