Choosing the right home insurance for your new home

Now that you’ve found the right property and you’re going through the motions of putting in an offer, it’s important to think about what insurance you’ll need to protect your new home. Without adequate insurance cover, you could leave yourself at risk of having to pay out of pocket for potential damage caused to your new home. And if you’ve just dropped the majority of your savings on said property, chances are you may not have much left in the kitty to cover replacement or repair costs.

Here’s everything you need to know about choosing home insurance as a new home buyer.

What is home insurance?

Home insurance is an umbrella term that encompasses three main types of insurance:

• Building insurance: covers the building itself, along with any fixtures and even permanent external structures, like pools and granny flats depending on your policy.

• Contents insurance: covers your personal belongings, like your TV, jewellery, artwork, furniture, etc. 

• Home and contents insurance: covers both the building, its fixtures and any permanent external structures along with your personal belongings. 

There’s also specific landlord insurance that’s designed to cover the risks that come with renting out your investment property. As a renter, you may be able to snag yourself renters insurance, which is a type of contents insurance that’s designed to protect your personal belongings. 

When to insure your new home

So, you’ve just signed the contract of sale and the clock has started ticking on the settlement period. You’re not even close to moving in yet, but depending on what state or territory you live in, you may need to take our home insurance sooner than you think. In some cases, home insurance is a requirement from lenders before granting your finance too, so there’s often more than one reason to take out home insurance.

Here’s a quick breakdown of the home insurance requirements based on where you live:

• Queensland: In Queensland, the buyer is responsible for the property from 5pm the following business day after both parties have signed the contract of sale.

• New South Wales and Victoria: In both NSW and Victoria, the buyer is responsible for any damage to the property from the settlement date. This means that the seller is responsible for the property up until this point.

• Tasmania, Australian Capital Territory and South Australia: In Tasmania, the ACT and SA, the buyer is responsible for any damage to the property throughout the settlement period. It’s important to note that if you’re buying a property in any of these states (and territory), you’ll need to have your home insurance organised before the exchange of contracts. 

• Western Australia and Northern Territory: In the NT and WA, the buyer becomes responsible for the property either:some text
  • On the date the buyer is entitled to or given possession, or
  • On the date that the full purchase price is paid.

Whichever of these dates comes first. 

If you’ve engaged a settlement agent, solicitor or conveyancer, they should be able to help you work out when to take out home insurance.

How to choose home insurance

When it comes to choosing a home insurance policy for your new property, there are lots of different factors to consider. Here are a few key points worth considering to help you find the right insurance policy for your new home.

Assess your needs

Before taking out an insurance policy, it’s important to reflect on your needs and your property. Take your time to determine the value of your home and how much it will cost to rebuild and replace your personal belongings. Different properties, like stand-alone homes, townhouses and heritage homes may also have different insurance needs.

Be sure to understand the risk of potential natural disasters in your area. If your home is located in an area that’s prone to flooding, fire or cyclones, you may be up for a higher premium to cover the extra risk.

Understand the policy details

Carefully read the Product Disclosure Statement (PDS) to understand what is included and excluded in the policy. Common exclusions might be certain natural disasters, wear and tear or specific types of damage. It’s also worth checking any limits, or the maximum amount the insurer will pay out for specific items or categories of items.

Lastly, don’t forget to consider the excess, which is the amount you’ll need to pay out of pocket when you make a claim. While higher excess can help to lower your premiums, it means higher out-of-pocket costs when claiming.

Compare policies

Rather than going with the first insurer you see, be sure to get quotes from several insurers to compare coverage options, premiums and discounts. There are plenty of online comparison sites you can use to quickly and easily compare policies side-by-side, to see how they stack up against each other.

Check for discounts

Some insurers offer discounts if you bundle home insurance with other policies like car insurance. You might also be able to take advantage of no-claims bonuses, which is a discount when you don’t make a claim for a certain amount of time.

Review your policy regularly

Lastly, make sure you review your policy regularly to make sure it’s still meeting your needs. Reassess your insurance needs annually or after significant changes like renovations or acquiring valuable items. It’s important to ensure your policy reflects any changes to your home’s value or your possessions. If you don’t update your policy, you could leave yourself open to underinsurance, meaning you might not have enough insurance to cover the cost of repair or replacement if you make a claim. 

While choosing insurance isn’t the most exciting part of the home-buying process, it’s an incredibly important step and one that shouldn’t be overlooked. Make sure to take out the right insurance at the right time, so you don’t leave yourself at risk of having to pay for any potential damage out of pocket. 

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This article is intended to provide general information only. It does not have regard to the financial situation or needs of any reader and must not be relied upon as financial product advice. Please consider seeking financial advice before making any decision based on this information.‍