- Home and contents insurance protects both your property and belongings from events like fire, storms, theft, and accidental damage.
- Policies can be taken out separately or bundled, with coverage depending on your insurer and chosen level of protection.
- Premiums vary based on factors such as location, rebuild costs, building characteristics, and optional extras.
- Reviewing your policy regularly helps you avoid being under- or over-insured and ensures your cover reflects your current needs.
Though none of us likes to think about it, there is always the possibility that your home (and your belongings) could be damaged or even lost; hence, it can be helpful to prepare for the worst.
Home and contents insurance is basically exactly what it sounds like. In essence, it insures both the inside and outside of your home. Rather than needing to set up two insurance plans, home and contents insurance bundles the two and protects you in any event where your home and/or your belongings are affected.
Here's what you need to know about what it covers, how it works in Australia, and how much you can expect to pay.
What is Home and Contents Insurance
Home and contents insurance is a type of insurance policy that protects both your property and belongings inside it from loss or damage.
Most insurers offer a bundled policy that covers both the building and your belongings (hence the name) under one premium. This can be easier to manage than two separate policies.
However, insurance that only covers the home and insurance for a home's contents are also available separately. We explain them further below.
Home insurance (building insurance)
This covers the physical structure of your home - from the windows to the walls - in case of damage or loss.
Home insurance typically protects against events like fire, storm damage, theft, or any other damage to your property, depending on your insurance plan. You could even be covered for things happening on your property, like your front gate falling.
Home insurance (landlord insurance)
Another type of home insurance, but tailored for landlord-specific risks, is landlord insurance.
It typically protects landlords against events like loss of rental income, theft, or damage to their properties caused by tenants. Other situations covered by home insurance can also be included in a landlord insurance arrangement.
Contents insurance
This covers personal possessions inside the home, such as furniture, electronics, appliances, clothing, jewellery, and other valuables, from damage or loss. Some policies also offer optional cover for portable items you take outside the home, such as phones, laptops, or bikes.
Home and Contents Insurance Coverage
When taking out a home and contents insurance plan, you'll likely be given two options to choose from: total replacement cover or sum insured cover.
Total replacement cover
It means that in case your home is severely damaged or destroyed (e.g., by a fire or severe storm), you would be reimbursed for the full cost of rebuilding or restoring your home to the condition it was prior to the incident.
Sum insured cover
It offers coverage up to a predetermined estimate you would need to pay if you needed to claim for damages. It's the more common of the two options.
- Take note: After choosing the type of home and contents coverage that suits you, you can choose some optional extras to be included in your plan. These are typically not included in the basic coverage provided, and this can vary.
How Much Does Home and Contents Insurance Cost
The average annual premium for combined home and contents insurance in Australia can cost around $2,500 to $2,800 (at the time of this writing).
As you can imagine, home and contents insurance can be more expensive than home insurance or contents insurance alone. But since you're getting two-in-one, combining them can work out to be cheaper and simpler, as a separate home/building insurance (home only) averages around $2,000+ per year.
What drives the cost?
Here are the main factors affecting how much you'll pay:
- Location - Homes in areas with higher natural hazard risk, such as flood, cyclone, or bushfire-prone locations, attract much higher premiums.
- Level of coverage - A general rule is that the more you're covered for (for rebuild or replacement), the more you'll need to pay.
- Type of policy - A combined home and contents policy generally costs more than a contents-only or building-only policy.
- Building characteristics - Age of building, construction materials, security features, and maintenance status can influence insurance costs.
- Claims history and insurer risk profile - If you have a history of making multiple claims, this will usually be factored into the cost of your annual insurance premium. Homes in "high-risk" suburbs (per the insurer) cost more to insure.
- Optional extras - Features such as accidental damage, portable contents cover, and high-value items will raise premiums.
- Quick tip: Most insurance companies allow you to get a quote, which you should take full advantage of, before you sign any dotted lines.
Sorting out your home and contents insurance is just one part of managing your property. If you're also looking to buy or refinance, the table below shows some of the lowest home loan rates for owner-occupiers.
| Lender | Home Loan | Interest Rate | Comparison Rate* | Monthly Repayment | Repayment type | Rate Type | Offset | Redraw | Ongoing Fees | Upfront Fees | Max LVR | Lump Sum Repayment | Extra Repayments | Split Loan Option | Tags | Features | Link | Compare | Promoted Product | Disclosure |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
5.94% p.a. | 5.98% p.a. | $2,978 | Principal & Interest | Variable | $0 | $530 | 90% |
| Promoted | Disclosure | ||||||||||
5.89% p.a. | 5.80% p.a. | $2,962 | Principal & Interest | Variable | $0 | $0 | 80% |
| Promoted | Disclosure | ||||||||||
5.99% p.a. | 6.02% p.a. | $2,995 | Principal & Interest | Fixed | $0 | $0 | 60% |
| Promoted | Disclosure | ||||||||||
5.93% p.a. | 5.93% p.a. | $2,975 | Principal & Interest | Variable | $0 | $395 | 70% | Disclosure |
How to Avoid Being Over- or Underinsured
Being correctly insured means your home and belongings are covered for what they're actually worth - not too little and not excessively.
You're more likely to be underinsured if you have sum insured cover, according to Moneysmart. However, there are ways to mitigate this risk, which we'll discuss more below. Meantime, here's how to stay protected without paying too much.
- Calculate an accurate rebuild cost - Underinsurance often happens because homeowners underestimate how much it would cost to rebuild their home after a total loss. To avoid this, use your insurer's rebuilding cost calculator and consider local construction costs, labour shortages, and material price changes.
- Create an updated home inventory - For contents insurance, list everything you own and what it would cost to replace them today. Update it every 12 months or after making major purchases.
- Check limits for high-value items - Many policies have sub-limits for valuables like watches, jewellery, artwork, electronics, etc. If they exceed the standard limit, you may need to list them individually or take out optional portable contents insurance.
- Review your policy every year - Always review after renovations, buying expensive items, moving house, and market price rises for building materials.
- Understand what events you're covered for - Confirm whether you're covered for flood, storm, fire, cyclone, theft, and accidental damage.
- Consider your area's risk profile - Premiums and coverage needs vary widely based on where you live. Matching your policy to real-world risk helps avoid overspending or being caught short.
- Keep records - If you upgrade your kitchens, bathrooms, roofing, etc., your rebuild cost goes up. Notify your insurer so they can adjust the sum insured accordingly.
A sample scenario of being overinsured
Insu Rance, an architect living in the Sydney suburbs, has insured his home and contents for $2 million.
On one fateful Tuesday, poor Mr Rance lost his entire house to a fire - meaning it's considered a total loss. Thankfully, he has total replacement cover, so he expects to be paid $2 million from his insurance company.
Unfortunately for Mr Rance, an assessor determined the home and contents were actually only worth $1.5 million - rather than the policy's $2 million coverage - so he essentially wasted insuring an extra $500,000 that simply wasn't there. And since he overinsured and tried to make a claim, the insurance company could potentially look into fraud allegations.
A sample scenario of being underinsured
Let's use another hypothetical example of Insu Rance to demonstrate.
After the fire, and his home was rebuilt, Mr Rance was broken into and robbed (poor guy can't catch a break). The burglar doesn't go for the big stuff - like the TV or the PC setup - but instead goes for his wife's jewellery. Despite the jewellery being worth $20,000, Mr and Mrs Rance didn't think to insure it under their home and contents insurance. So they are unable to receive compensation.
What Happens to Home & Contents Insurance When You Move House
Moving house can get a little tricky when it comes to your home and contents insurance. Obviously, your home insurance will need to be rejigged because your new abode may be valued differently. However, your contents insurance may also be up in the air during the move.
Do you need new home insurance when you move?
The short answer is yes. In most cases, you should be able to simply transfer your home insurance policy to your new home.
As you can imagine, you'll likely end up paying a different amount once you account for the new home - new costs, risks, location and all. Things can get a little messy when it comes to that last part - location.
For example, if you're moving interstate, but your insurance company isn't licenced to write insurance policies in said state, you might need to find a new insurance company.
- Quick tip: Whether you're moving interstate or around the corner, you should contact your insurer to let them know, and they should be able to guide you from there.
Are your contents covered during the move?
Since your contents will be out and about while moving between homes, in some cases, they may not be covered by your insurance.
For example, if the removalists damage your TV due to poor handling during the move, you likely won't be able to claim damages.
In most instances, your belongings will still be covered in certain events - like a fire or collision - but generally, you won't be as covered as per usual.
- Quick tip: You may be able to add more coverage to your insurance plan. Reach out to your insurer to get some clarification or check out your Product Disclosure Statement (PDS) to know exactly where you stand.
What about the in-between period of buying and selling a home?
According to NRMA Insurance, the answer to this question depends on your policy and where you live. If you insure your home and/or contents through NRMA, for instance, your new home is covered for a certain period of time, as well as your current home. But the details of how much you're covered depend on where your home is located.
Each insurance company have its own policy when it comes to moving homes and moving your insurance with you.
- Quick tip: If you're unsure whether you'll be covered during your move or you're not sure what to do about your insurance, get in touch with your insurance provider and go from there.
Tips for Comparing Home and Contents Insurance
Finding the right home and contents insurance isn't just about choosing the cheapest premium or getting the most coverage. It's about getting the right level of protection for your property and belongings. Here's what to look out for when comparing policies:
Check what events are covered
Make sure you know not only what's included in your coverage, but what's not included. Not all policies automatically include:
- Flood
- Storm surge
- Cyclone
- Bushfire
- Accidental damage
- Theft outside the home
- Quick tip: Make sure you're comparing like-for-like coverage, especially if you live in a high-risk area.
Understand the excess
This is the amount you pay to make a claim. Pay attention to this as it can end up costing you more if you have a high excess but low premium when making a claim is factored into the equation
Higher excess = lower premiums Lower excess = higher premiums
Review policy limits and sub-limits
Your cover limit is the maximum amount you could claim for certain items. For example, if your home floods and you need to replace all your hardwood floors, but you're only covered for $2,000, you may still end up out of pocket.
If you have high-value possessions, check whether they need to be listed individually. Sub-limits can heavily restrict your payout for specific items, such as:
- Jewellery
- Electronics
- Artwork and collectibles
- Bikes or sports equipment
Compared sum insured vs total replacement cover
This affects how your home is rebuilt after a major event.
- Sum insured - You choose the rebuild amount (risk of underinsurance)
- Total replacement - Insurer covers whatever it costs to rebuild (usually more expensive; fewer insurers offer it)
Look at claim timeframes and reputation
Fast, fair claims handling is essential. Check independent customer reviews, complaint statistics, product review ratings on credible websites, and AFCA data (if available).
Compare optional extras
With the risk of under-insurance being higher, some insurers will offer extended cover to function as a 'safeguard' or 'safety net'.
Optional add-ons can provide extra protection but increase premiums. These include:
- Accidental damage
- Portable contents cover
- Motor burnout
- Temporary accommodation (after insured events, e.g. fire)
- Pet cover
- Home office equipment cover
Check for weather risk pricing
In areas prone to natural disasters, premiums can vary massively between insurers. Always compare multiple insurers if you live in flood zones, cyclone-prone regions, or high-bushfire-risk areas.
Savings.com.au's Two Cents
Is having home and contents insurance mandatory? No, it's not - but it can definitely come in handy.
If you live in a flood-prone area or own high-value items like jewellery, the extra cover can offer real peace of mind. However, if you're renting, contents insurance alone may be enough since your landlord covers the building.
Ultimately, the choice is yours. If you end up passing on insurance altogether to save money, ask yourself: Can you afford to rebuild your entire house without an insurance company giving you a boost? And before choosing a policy, it's worth seeking independent financial advice.