Building Insurance
Find and compare building insurance policies to lock in the best one to suit your needs.
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Insuring your property is one of the first steps homeowners have to take immediately post-purchase. Your property is, after all, your most valuable asset. Finding the right option to suit your needs isn’t as hard as you might think when you compare between policies; there’ll always be a building insurance policy in Australia to suit you. Learn more about the ins and outs of building insurance, how it works and how you can find the best deal through comparing your options.
What is building insurance and how does it work?
Building insurance, otherwise known as home insurance, is a type of insurance policy designed to cover damage sustained by your property. In the same way that you’d insure your car in case it gets damaged or written off in an accident, it’s always essential that you prevent yourself from getting into a situation which could end up costing you tens of thousands of dollars out of pocket.
It’s worth noting, though, that building insurance is not the same product as home and contents insurance. While the “home” aspect of home and contents insurance aligns with building insurance, the “contents” coverage isn’t offered under a sole building insurance policy. Contents insurance covers you financially for damage, loss and destruction of your possessions under certain circumstances. While building insurance presents itself as a cheaper option for insuring your home, home and contents insurance provides customers with far greater coverage and peace of mind.
What will my building insurance policy cover?
A good building insurance policy will cover you for as many different types of property damage as possible. When comparing a building insurance quote with other options, you should always keep in the forefront of your thinking the scope of coverage you’d be receiving under each policy. Most building insurance policies will cover some, or all, of the following types of damage:
| Type of damage covered | Why it’s important to have |
|---|---|
|
Theft/burglary |
This applies to the damage your property may sustain, such as fences, doors or windows. While this may only qualify as theft if you have possessions stolen, most insurers will also provide coverage for damage sustained through an attempted theft or burglary. It’s important to note that not all insurers will offer coverage for broken windows under their building insurance policy, but it’s often available as an optional extra. Coverage can also extend to intentional destructive acts with no view to theft or burglary. |
|
Extreme weather |
Incidents such as fires, floods, lightning and hailstorms can all cause significant damage to your home, particularly if you’re living in an at-risk area. Fortunately, in most cases, you’ll be covered for the damage to your property caused by these events. One thing to bear in mind is insurance providers’ differing definitions of these events. For example, while flood coverage will likely include water overflowing from a river, lake or creek, any damage caused by high oceanic tides or rising sea levels probably won’t be. |
|
Escape of liquid |
Different to flooding, this relates to events such as the bursting of pipes or damage caused by water leakage or overflow from appliances like fridges, baths, toilets and washing machines. In extreme circumstances, this water damage can rival that caused by major flooding, so you should look for coverage in this area. You may not be granted any reimbursement for your claim if your insurer deems that you haven’t done a sufficient job in ensuring appliances, pipes and drains are in a reasonable condition. |
|
Animal damage |
Coverage of this nature is generally limited to damage caused to your property by non-vermin animals. As such, pests like insects and rodents won’t be covered for animal damage. However, if a dog breaks into your backyard and wreaks havoc or a bird finds its way down your chimney and leaves a trail of destruction across your house, you may have grounds to make an insurance claim. |
|
Impact damage |
This refers to damage caused to your property by an external force colliding with it. In most cases, impact damage is limited to that caused by a tree or another vehicle. For example, if a motorcycle crashes into your front fence, you’re likely to be covered for the cost of repairs. |
|
Civil commotion or riot |
Damage sustained to your property by an angry mob is covered by many building insurance policies. An instance of this would be if a large group of people ran through your street and intentionally or recklessly damaged various houses along the way, including your own. |
The pros and cons of building insurance
PROS
Less expensive alternative
If you don’t have to worry as much about contents, as is the case for someone like an investment property owner, this is a cheaper option than home and contents insurance.
Wide property damage coverage
As can be seen in the table above, building insurance covers a variety of different types of damage.
Deal with one insurer and one policy
Adding contents coverage could add greater complications to your payment cycles, particularly if you’re looking for individual building and contents insurance policies. Sticking with just one policy keeps things simple with you payment cycle.
CONS
Doesn’t cover contents
For owner-occupied properties, it’s usually advisable to take the hit on the several hundred dollars extra for contents insurance to cover your valuables.
Forcing you into optional extras
Insurers may not list all of their intended coverage areas under their building insurance policy and will instead charge you for optional extras such as accidental damage and motor burnout cover.
Still paying out of pocket
Like most insurance policies, you may still have to pay a significant amount out of pocket even if your claim is covered by your insurance policy.
How to choose building insurance?
Knowing the difference
Total replacement cover, as the name suggests, will cover you for all costs associated with rebuilding your property to the standard it was at before it sustained damage. Sum insured cover will provide you with coverage for a set amount that you determine with your insurer at the start of your policy.
Comparing the benefits
The obvious benefit of total replacement is that it provides the most comprehensive and up-to-date coverage in the event that you’re forced to make a damage claim. Sum insured cover will typically add less onto your insurance premiums, as the funds covered are likely to be lower.
Understanding the risks
What total replacement doesn’t afford you that sum insured does is agency over the amount you’re insured for. Your insurer will determine the coverage based upon market value and other variables. The main risk of sum insured cover is that you could find yourself underinsured if your policy isn’t up to date or you’ve miscalculated the value of the damaged areas. In some cases, this could cost you hundreds or thousands of dollars.
Deciding which is best for you
Weighing up the factors listed above, you’ll have to decide which type of building insurance cover is worth purchasing on your policy. The answer for which is better will vary for person to person and depend on the type of property they’re insuring and their financial capability.