When you shop for home insurance you’ll usually be asked whether you want building cover, contents cover or both. Here’s what each one means and how to decide what you need.
What building insurance covers
Building insurance protects the physical structure of your home. That typically includes the walls, roof and floors, along with fixtures that are permanently attached, such as built-in cupboards, fixed heating and cooling, and the kitchen and bathroom fittings. Many policies also include structures like garages, sheds and fences. Exactly what counts as “building” varies, so check the definitions in the Product Disclosure Statement (PDS).
What contents insurance covers
Contents insurance protects the things you own inside your home. That includes furniture, clothing, appliances, electronics and other household items. Policies often limit how much they’ll pay for certain items, such as jewellery or valuables, unless you list them separately.
A simple way to remember the difference: if you turned your home upside down, whatever falls out is usually contents, and whatever stays put is usually building.
Which one do you need?
- You own and live in a house: you’ll usually want both building and contents cover.
- You own a unit in a strata scheme: the owners corporation normally insures the building, so you may only need contents cover. Check the strata policy to see what it includes.
- You rent your home: your landlord insures the building, so contents cover protects your own belongings.
- You rent out a property: a landlord policy is designed for this. See our guide on what landlord insurance covers.
Choosing your sum insured
Your sum insured is the most a policy will pay for a claim on your building or contents. For building cover, base it on the full cost to rebuild your home, including demolition and professional fees, not the market value of the property. For contents, add up what it would cost to replace your belongings new. Underinsurance is common, so it’s worth reviewing these amounts every year.
Excess and premium
The excess is the amount you pay towards each claim. Choosing a higher excess usually lowers your premium, but it means you’ll pay more when you claim. Pick an amount you could comfortably cover.
Get a quote
NeedCover Home & Contents Insurance is coming soon. If you own a rental property, see what Landlords Insurance covers and get a Landlords Insurance quote online today. Questions? Call 1300 368 112.
This article is general information only and doesn’t take into account your objectives, financial situation or needs. Read the PDS and Target Market Determination (TMD) before you decide whether a product is right for you.