Home Insurance Comparison Australia | Protect Your Property

Building Insurance vs Contents Insurance vs Combined Cover

Home insurance in Australia comes in three main forms: building insurance, contents insurance, and combined policies that bundle both together. Understanding the difference between these cover types is crucial for ensuring you have the right level of protection for your situation.

Building Insurance

Building insurance covers the physical structure of your home and permanent fixtures. This includes the walls, roof, ceilings, and floors of your house, as well as built-in fixtures like kitchen cupboards, bathroom vanities, built-in wardrobes, and permanently installed appliances like ovens and dishwashers. It also typically covers external structures such as garages, carports, sheds, fences, gates, retaining walls, driveways, paths, and in-ground swimming pools.

If your home is damaged or destroyed by an insured event — such as fire, storm, or impact — building insurance pays for the cost of repairs or rebuilding. The sum insured should be set at the estimated cost to completely rebuild your home from scratch at current construction prices, including demolition and debris removal, site clearing, architect and engineering fees, council approval costs, and construction using similar materials and quality.

This is different from the market value of your property, which includes the land value. Since you are insuring the structure, not the land, the rebuild cost is often lower than the purchase price in expensive areas but can be higher in areas where construction costs are elevated. Underinsurance is a significant problem in Australia — the Insurance Council of Australia estimates that up to 83% of Australian homes are underinsured by an average of 40%. Getting a professional rebuild cost assessment is well worth the investment.

Contents Insurance

Contents insurance covers the personal belongings inside your home that are not permanently attached to the structure. This includes furniture, electronics, televisions, computers, and gaming consoles, clothing and shoes, kitchen appliances and cookware, bedding and linen, jewellery, watches, and accessories, artwork and collectibles, sporting equipment, tools, and musical instruments.

To determine how much contents cover you need, walk through your home room by room and estimate the replacement cost of everything at current retail prices. Most people significantly underestimate the total value of their belongings. A typical three-bedroom home can easily contain $80,000 to $150,000 worth of contents once you add up furniture, electronics, clothing, and household items.

High-value items such as jewellery, watches, artwork, and collectibles typically need to be listed separately on your policy with individual values. There are usually per-item limits in standard policies — for example, a policy might cover contents up to $100,000 total but limit individual items to $2,500 unless specifically listed. If you own high-value items, check these sub-limits carefully.

Combined Building and Contents Insurance

Combined policies bundle building and contents insurance into a single policy. This is the most popular option for homeowners because it simplifies administration (one policy, one premium, one renewal date) and usually costs less than purchasing building and contents cover separately. The discount for combining is typically 5-15% compared to two standalone policies.

When choosing a combined policy, you set separate sum insured amounts for the building and contents components. Make sure both amounts are adequate — do not skimp on one to save on the premium. Renters should note that they only need contents insurance since the building is insured by the property owner.

What Is Covered by Home Insurance

While policies vary between insurers, most standard home insurance policies in Australia cover a core set of insured events. Understanding what is and is not covered helps you choose the right policy and avoid surprises at claim time.

Events Typically Covered

Most home insurance policies cover fire and explosion, storm and tempest (including wind, rain, and hail), lightning strike, theft and attempted theft, burglary and break-in, vandalism and malicious damage, impact by vehicles, falling trees or branches, water damage from burst pipes or overflowing appliances, earthquake, and accidental damage (often as an optional extra). Some policies also cover escape of liquid from fixed plumbing, glass breakage, and damage caused by tenants if the property is rented out.

Events Typically Not Covered

Common exclusions that catch people off guard include general wear and tear and gradual deterioration, maintenance-related damage such as rust, rot, mould, and mildew, termite and pest damage, damage from tree roots, subsidence and ground movement (unless caused by earthquake), intentional damage or illegal acts, and damage while the home is unoccupied for more than 60 consecutive days. Flood is a particularly important exclusion to check — while many insurers now include flood cover as standard, some still offer it only as an optional extra or may exclude it entirely in high-risk flood zones.

Natural Disaster Coverage

Australia is particularly vulnerable to natural disasters including bushfires, storms, floods, cyclones, and hail. Understanding how your home insurance handles these events is critical, especially if you live in an area prone to natural disasters.

Storm and Cyclone

Storm damage is covered under virtually all standard home insurance policies. This includes damage from strong winds, heavy rain, hail, and lightning. In cyclone-prone areas of northern Australia, cover is typically included but may come with a higher excess. Some insurers apply a separate cyclone excess that can be significantly higher than the standard excess — sometimes $2,000 to $5,000 or more. Check your policy carefully if you live in a cyclone-affected region.

Flood

Flood cover has been one of the most contentious issues in Australian home insurance. Following major flooding events, the industry adopted a standard definition of flood in 2012. However, flood cover is still handled differently by different insurers. Some include it as standard, some offer it as an optional extra, and some exclude it entirely in high-risk areas. If your property is in or near a flood zone, flood cover should be a key factor in choosing your insurer. Be aware that premiums in flood-prone areas can be substantially higher, sometimes adding thousands of dollars to the annual cost.

Bushfire

Bushfire is covered under standard home insurance policies across Australia. However, if you live in a designated bushfire-prone area (BAL-rated zone), your premiums will be higher to reflect the increased risk. Some insurers may apply additional conditions or higher excesses in extreme bushfire zones. Maintaining a defensible space around your property by clearing vegetation and maintaining fire breaks can help reduce your risk rating and potentially lower your premium.

Earthquake

Earthquake cover is included as standard in most Australian home insurance policies. While major earthquakes are relatively rare in Australia, they do occur — the 2021 Melbourne earthquake (magnitude 5.9) caused significant property damage. Standard earthquake cover typically has no additional excess beyond your normal policy excess.

Tips for Getting the Best Home Insurance Rate

Home insurance is one of the most variable insurance products in terms of pricing. The difference between the cheapest and most expensive quote for the same property can be 50% or more, making comparison essential.

Compare Quotes from Multiple Insurers

The most effective way to get a better rate is to compare quotes from multiple insurers. Each insurer assesses risk differently based on your property's location, construction type, age, and features. An insurer that is expensive for one property type might be very competitive for another. Our free comparison tool lets you see quotes from 20+ insurers side-by-side to find the best deal for your specific property.

Choose Your Excess Wisely

Increasing your excess reduces your premium because you are taking on more financial risk yourself. Most insurers allow you to choose a voluntary excess on top of the standard basic excess. Increasing your total excess from $500 to $1,000 or $1,500 could reduce your premium by 15-25%. Just ensure you can afford to pay the excess if you need to make a claim.

Improve Your Home Security

Installing approved security features can reduce your premium by 5-15%. Key security features that insurers look for include deadlocks on all external doors, key-operated window locks, a monitored burglar alarm system, security screens on doors and windows, sensor lights around the perimeter, and a home security camera system. These features reduce the risk of break-in and theft, which is one of the most common claims categories.

Maintain Your Property

Well-maintained properties are less likely to suffer damage, and insurers recognise this. Regular maintenance tasks that can help keep your premiums competitive include clearing gutters and downpipes regularly, trimming trees and branches away from the house, repairing roof damage promptly, maintaining plumbing and fixing leaks quickly, keeping the property clean and free of hazards, and ensuring electrical wiring is up to standard.

Review Your Cover Annually

Do not simply auto-renew your home insurance each year. Premiums often increase at renewal, sometimes by 10-20% or more, without any change in your circumstances. By comparing quotes annually, you can ensure you are still getting a competitive price. Also review your sum insured amounts to make sure they still accurately reflect your rebuild cost and the value of your contents — construction costs and the prices of furniture and electronics change over time.