Top 5 Building and Contents Insurance FAQs for Australian Homeowners

1. How much does home insurance cost and how can I save money?

Home insurance costs vary dramatically based on location and risk factors. For a house in suburban Adelaide, the cheapest offer was $345 a year, while in high-risk areas like the NSW Great Lakes region, the best price was $34,000. Shopping around can save thousands – the difference between cheapest and most expensive policies ranges from $1,504 in South Australia to $4,429 in North Queensland. Key money-saving strategies include: shopping around annually to avoid the loyalty penalty (new customers often get better deals), increasing your excess to $1,000-$1,500 (can reduce premiums by about 10% for every $500 increase), paying annually instead of monthly (saves 10-25%), and looking for discounts like bundling policies or security system installations.

2. How much coverage do I need and what’s the difference between policy types?

You need to determine your ‘sum insured’ figure – the dollar value to completely repair, rebuild and replace everything. Most policies are sum insured policies that pay claims up to the specified amount. Safety net policies offer additional protection with up to 30% extra coverage above your sum insured in case of total loss. Total replacement policies (now rare) pay whatever it costs to rebuild regardless of your sum insured. Use your insurer’s online calculator to determine your sum insured, as different insurers include different costs (like demolition and debris removal) either within or on top of your coverage amount.

3. What does home insurance actually cover?

All policies cover standard insured events including fire and explosion, storm damage, lightning, theft, vandalism, impact damage, sudden escape of liquid (burst pipes), and accidental breakage of glass and ceramics. Flood cover is now included in most policies by default, even in low-risk areas. However, coverage for extreme weather varies significantly – many insurers exclude ‘actions of the sea’ (high tides, storm surges, tidal waves), and fire cover definitions differ regarding damage from heat, ash, smoke or soot from nearby bushfires. Always check your Product Disclosure Statement for specific definitions and exclusions.

4. Should I get building insurance, contents insurance, or both?

Building cover is essential if you own your house – it’s typically required by your mortgage lender. If you’re a renter, building insurance is your landlord’s responsibility. In strata properties, building insurance is covered through the strata plan, though you may need to check what fixtures and fittings are included. Contents insurance covers your belongings and is recommended for both homeowners and renters. You can buy building-only, contents-only, or combined policies. Many insurers offer discounts for combining coverage, but ensure both policies meet your needs rather than just chasing the discount.

5. How do I choose the best insurer and avoid common pitfalls?

According to CHOICE’s consumer survey of 1,200 respondents, RACQ was the top-rated insurer, followed by RAC, RAA, RACV, Apia, Youi, Suncorp, GIO and NRMA. However, the best insurer for you depends on your specific needs and location. Key tips include: getting quotes from at least three insurers (some will match competitors’ prices), checking your renewal price against new customer quotes from your current insurer, reading the fine print for definitions and exclusions, keeping detailed records and photos of your belongings, and understanding that cheaper isn’t always better – focus on policies that provide adequate coverage for your circumstances. Remember that 87% of policyholders saw premium increases at renewal, making annual comparison shopping essential.