Home insurance basics

You might need one policy for the building itself and another for your contents. You can usually save money by combining your building and contents insurance into one policy.

If you’re buying a home, your lender will probably need your building insurance policy details as part of your mortgage paperwork, so it’s a good idea to get a home insurance quote as soon as possible.

Building insurance covers the physical structure of your home, including your roof, walls and windows. It also covers permanent fixtures and fittings such as your bath, toilet and fitted kitchen.

Depending on the policy you choose, your building insurance could cover damage caused by fire, lightning, explosion or earthquake, theft or attempted theft, riots or vandalism, storms or flooding, falling trees, moving objects (such as a car driving into your home), and escaping or leaking water or oil. Building insurance usually also covers you for legal liability as owner of the property, such as for damage caused to someone else’s property.

Your home contents are everything from your furniture, appliances and clothing to your guitar collection and jewellery. Find out the basics of contents insurance.

Some policies will include limited cover for accidents such as glass breakage. If not, you can often add accidental damage to your policy, which means you’ll pay more for your insurance but will be covered for more events. Always check your policy documents for details of what’s covered.

Most building insurance policies will NOT cover:

• Wear and tear, gradual deterioration and lack of maintenance.
• Mildew and rust.
• Damage caused by certain events when you’re renovating.
• Theft or damage, such as water or wind coming through an open window, which happens as a result of your windows or doors being left open.

Always check your policy carefully to make sure you understand what is and isn’t covered.

You need enough insurance to cover the cost of replacing the building itself and all permanent fixtures and fittings inside it, including demolition, architect and builders fees. This is known as your building sum insured. It’s not the same as the market value of your home, which is how much it would sell for and includes the cost of the land. Use our calculator to work out the cost of rebuilding your home.

The excess is the amount you agree to pay if you make a claim, with your insurance covering the rest. Depending on your policy, you might have to pay more than one type of excess – for example, cover for an earthquake could include an extra excess.

If you’re renting, you may want to consider basic contents insurance. This is generally a low-cost contents policy that provides limited cover for tenants.

If you have an investment property, landlord’s insurance might be your best option. This covers the risks associated with renting out a property.