Home Insurance covers the cost of the damages caused by accidental or natural disasters and insures your home and all the assets in it. The insurance is also called building insurance or property insurance and is one of the most important back-ups that anybody should hold as a homeowner. It is a policy that has your back, post-disaster.
When do you need to buy home and content insurance?
Home insurance needs to be arranged before you take the ownership of a property to make sure that you become the homeowner with the protection against damages to the asset you are going to own.
When you are buying a property, you need the home insurance before the settlement of your purchase transaction. Many banks require a copy of the policy certificate to be held in the file before placing your matter ready for the settlement.
When you are building a house, you will need to provide home insurance before asking the bank to release the final payment.
If the property you are buying is strata titled, your strata scheme will have the cover for your buildings. Please speak to your conveyancer or solicitor and confirm if there are any other arrangements.
Home Vs Home and Content Vs Landlord?
Home insurance covers the building/residential site of the damage. When you think of buying home insurance, it generally comes with optional content insurance as well. This content insurance will provide cover for your other valuable and personal possessions such as electronics, furniture, jewelry, etc.
If your property is being used as an investment property, you will also need to purchase landlord insurance which covers the damages that may be caused by your tenants and cover from rental loss in case of certain incidents.
How much cover do you need for your home insurance?
There is no hard and fast rule for how much cover you should buy for home insurance. Below are some of the guidelines you can use to purchase your insurance policy:
- Replacement value as per the lender valuation report. Please speak to the lender or your mortgage broker for the amount; or
- 50% of the property purchase price
If you are building a house, then you would need the insurance of at least 80% of the construction price.
Please note that over-insurance is always better than under-insurance. So, please feel free to use your personal judgment when you are buying the policies considering all the underlying advice you seek.
Where can you buy this from?
Home insurance falls under general insurance financial products in Australia. There are different ways on how you can buy them and some of the options are:
- Banks you are getting your home loan from; You may walk to any bank branch and ask for the insurance purchase
- Insurance companies that you already have your other insurance covers such as car insurance etc. You can call them and ask for the home insurance as well so that you have all your insurances organized from the same place
How do you buy?
You can buy home insurance online or by calling the bank or insurance companies or even by attending to one of the bank branches, whichever you find comfortable.
You will need some information about your building such as the age, wall and roof type, construction type (is it or slab foundation or something else), any existing security systems in place, etc. Please keep this information handy before calling the insurance companies.
If you liked the price quote, you may want to proceed with the policy. The premium amount can be paid monthly or annually. Please note that you can always change (dial-up or dial-down) the insurance cover amount later as well. As soon as you confirm the purchase, you will get a certificate of currency or policy certificate. Please keep this safe and forward a copy to the lender or your mortgage broker.