Get The Most Out Of Your Home Insurance: A Guide For Homeowners

For most of us, our homes are more than just physical dwellings; they’re our sanctuaries, where we seek refuge from the outside world. 

Whether you live in or rent out, your home is one of your most significant investments and best assets. As such, it's natural to want to protect it. That’s where home insurance comes in. As a homeowner, you should be equipped with ways to safeguard your home against unforeseen events.

But balancing sufficient coverage with affordability presents challenges when the cost of living is so high. How do you get the most out of your home insurance? And how do you ensure you’re not being taken for a ride? 

In this guide, we’ll explain the basics of home insurance and provide the essential information you need to maximize your coverage.

What Is Home Insurance?

Home insurance is a type of policy that provides financial protection for property repairs or replacements caused by incidents such as natural disasters, theft, or accidents. 

The Australian Bureau of Statistics (ABS) has reported that the cost of home insurance has increased by 16.2% since 2023, which means it’s more important now than ever to understand your insurance options. 

For tips on getting more value from your home insurance, click here.

The Different Types of Home Insurance

To begin with, there are many different types of home insurance available. The main ones you should be concerned with include: 

• Building Insurance: This policy covers the physical structure of your home against damage.
• Contents Insurance: This protects personal belongings within your home.
• Home and Contents Insurance: This comprehensive policy combines building and contents insurance under a single premium.
• Landlord Insurance: Designed for property owners, this policy covers the property and items provided for tenant use, such as appliances.

Getting the Most Out of Your Home Insurance

Given the rising costs associated with home insurance, we’ve rounded up our top 5 tips for making your home insurance work hard for you and getting the most out of it. These include: 

1. Understand the type of coverage you need

• Calculate the actual costs of rebuilding 

2. Examine the exclusions 
3. Renew and update your policy regularly 

• Look for discounts

4. Compare home insurance providers
5. Tailor your premiums with your excess 

Understand the Type of Coverage You Need

Generally, you will choose between two types of coverage:

• Sum-insured cover: An estimated cost for rebuilding your home.
• Total replacement cover: The precise cost to rebuild your home to its original condition. While total replacement cover is more comprehensive, it is typically more expensive.

The type of coverage you pick will determine your costs. This leads us to our next point… 

Calculate the Actual Costs of Rebuilding

If you opt for sum-insured cover, accurately determining this amount is crucial. Most insurers provide online calculators that assist with this process. When using these tools, ensure that you account for factors such as:

• The topography of your property (e.g., is your house on a slope?)
• The age of your home
• The quality of your fixtures and fittings

These considerations will help give you a more precise estimate than relying solely on cost per square meter. 

It’s also essential to verify whether your policy includes supplementary costs, such as debris removal or accommodation expenses during reconstruction.

Examine the Exclusions

Home insurance typically covers loss or damage caused by defined events, including fire, storms, and theft. But, just as important as what’s included in your policy is understanding what is excluded from coverage to avoid being underinsured.

For example, while some policies may cover storm damage, they might exclude smoke damage or certain types of flooding. Ensure you scrutinize the exclusions and the threats relevant to your location are accounted for. 

Renew and Update Your Policy Regularly

To really get the most out of your home insurance, you should review and update your policy regularly, particularly after any renovations or significant changes. 

If you’ve been with the same insurer for over two years, consider negotiating a discount or exploring other insurers, as new customers often receive promotional rates. This kind of knowledge can give you a leg up! 

Look for Discounts 

Many insurers offer discounts for specific measures - like installing security systems or maintaining a good claims history. 

In many cases, bundling home insurance with other policies can also lead to further savings. Ask your existing insurer where you can ease the load, or consider this your sign to switch things up! 

Compare Home Insurance Providers 

Extending this point, because insurance policies and rates can vary significantly between providers, it's your (and your wallet’s!)  best interest to shop around. 

Read the Key Facts Sheets or Product Disclosure Statements (PDS) to get the basics, and look out for the main features: 

• Premium: The periodic cost for your coverage, typically billed annually or monthly.
• Excess: The out-of-pocket expense you incur when making a claim; higher excess amounts can lead to lower premiums.
• Exclusions: Items or events not covered by the policy, including caps or limits on certain events.
• Legal liability cover: This covers injuries to others or damage to their property occurring at your home.
• Extended cover: Additional options to ensure adequate coverage beyond the standard limits.
• Cover limits: Policies may impose maximum limits on claims for specific items.

Tailor Your Premiums With Your Excess

Most insurers will let you pay a lower premium in return for a higher excess. Be mindful, though, that doing so may mean higher out-of-pocket expenses when it comes time to make a claim. 

But, for those wanting lower expenses when making a claim, selecting a lower basic excess may give you the cover you need with a premium you can afford. 

Ultimately, getting the most out of your home insurance comes from understanding your basic entitlements and options. 

What About Fully Furnished Apartments?

For those renting out fully furnished apartments, it's crucial to consider insurance coverage for not just the building itself but also the contents provided for tenant use. Service fully furnished apartment often include high-value items such as appliances, furniture, and electronics, which need adequate protection.

Landlord Insurance is typically the go-to policy for these situations. It can cover both the property's structure and its contents. Additionally, some policies may include coverage for rental income loss due to events like fire or tenant-related damages.

If you rent or manage fully furnished apartments, ensure your policy aligns with the unique risks of maintaining such properties. This approach safeguards your assets and provides peace of mind for you and your tenants.