Australian Insurance Policy Guide
Understanding your insurance coverage is critical. Studies show 99% of Australians don't fully understand their policies. This comprehensive guide explains what's covered, what's not, and what you should look for in your insurance policies.
Important Disclaimer
This guide provides general information about Australian insurance policies. Coverage details, terms, and conditions vary between insurers and specific policies. Always read your Product Disclosure Statement (PDS) and consult with your insurer or insurance broker for specific coverage details. This information is current as of 2024 but insurance products and regulations change regularly.
Why Understanding Your Insurance Matters
The Coverage Gap Crisis
- • 80% of Australians are underinsured by an average of 30%
- • 1 in 5 claims are disputed due to misunderstanding of coverage
- • Average household undervalues contents by $100,000+
- • Many discover exclusions only after making a claim
Australian insurance policies are complex legal documents, often 50-100 pages long. Most policyholders never read beyond the summary, missing critical exclusions, limits, and conditions that could leave them exposed during disasters.
As restoration professionals, we see the devastating impact of inadequate coverage daily. Families forced to pay tens of thousands out-of-pocket for repairs their policy doesn't cover. Businesses that never recover because they didn't have interruption insurance.
This guide breaks down each type of insurance in clear, practical terms, helping you understand exactly what protection you're buying and what gaps might exist.
Types of Insurance Coverage
Home & Building Insurance
Covers the structure of your home including walls, roof, and fixed fixtures
- Covers rebuild costs, not market value
- Includes permanent fixtures and fittings
- Usually covers outbuildings like garages
- Essential for homeowners with mortgages
Contents Insurance
Protects your personal belongings and household items
- Covers furniture, electronics, clothing
- Portable items can be covered away from home
- Specified items for high-value goods
- Available for renters and homeowners
Landlord Insurance
Specialised coverage for investment property owners
- Rental income protection
- Tenant damage coverage
- Legal liability protection
- Building and contents options available
Business Interruption Insurance
Protects business income during unexpected closures
- Covers lost income during closure
- Ongoing expenses coverage
- Employee wage protection
- Customer/supplier contract penalties
Strata Insurance
Coverage for unit owners and body corporates
- Common property protection
- Building structure coverage
- Public liability included
- Shared by all unit owners
Understanding Coverage Levels
Basic Cover
Entry-level protection with essential coverage
Typically Includes:
- ✓ Fire and smoke damage
- ✓ Storm and rainwater damage
- ✓ Lightning strikes
- ✓ Explosion
- ✓ Theft and burglary
- ✓ Malicious damage/vandalism
Usually Excludes:
- ✗ Accidental damage
- ✗ Flood (in many policies)
- ✗ Portable items outside home
- ✗ Motor burnout
- ✗ Pet damage
- ✗ Gradual deterioration
Comprehensive Cover
Full protection with broader coverage and higher limits
Includes Everything in Basic Plus:
- ✓ Accidental damage/breakage
- ✓ Flood coverage (check specific policy)
- ✓ Portable items coverage (limited)
- ✓ Motor burnout
- ✓ Food spoilage
- ✓ Alternative accommodation
- ✓ Legal liability (higher limits)
- ✓ Keys and locks replacement
Common Optional Extras:
- + Specified high-value items
- + Accidental damage by pets
- + Home office equipment
- + Swimming pool/spa coverage
- + Identity theft protection
- + Domestic workers compensation
- + Increased portable items limit
- + Visitors' contents coverage
Critical Must-Haves in Any Policy
1. Adequate Sum Insured
Building: Should cover full rebuild cost including demolition, architect fees, council approvals. Add 20-30% buffer for cost escalation. Use online calculators from insurers for accuracy.
2. Flood Coverage
Since 2012 standard definition, but not all policies include it. Essential in flood-prone areas. Check if it covers storm surge and overflowing waterways.
3. Alternative Accommodation
Should be 10-20% of building sum insured or 12+ months rent. Critical if home becomes uninhabitable. Check if it includes pet accommodation.
4. Legal Liability
Minimum $20 million recommended. Covers injury to others or damage to their property. Essential protection against lawsuits.
5. Removal of Debris
Should be included in building sum insured. Can cost $20,000+ for major damage. Includes safe disposal of hazardous materials like asbestos.
6. Professional Fees
Architects, engineers, surveyors fees for rebuild. Usually 10% of building cost. Essential for heritage or complex properties.
Critical Exclusions Most People Don't Know About
Maintenance-Related Exclusions
- Gradual damage: Slow leaks, rising damp, wear and tear
- Lack of maintenance: Blocked gutters causing overflow
- Tree roots: Damage to pipes from root intrusion
- Rust and corrosion: Old pipes failing
Event-Specific Exclusions
- Actions of the sea: Coastal erosion, king tides
- Earth movement: Landslide, subsidence (unless from covered event)
- Unoccupied property: Damage after 60+ days vacant
- Illegal activities: Damage during illegal use of property
Always read the PDS "General Exclusions" section - it's typically 3-5 pages that could save you tens of thousands of dollars in denied claims.
Detailed Policy Guides
Home & Building Insurance
Complete guide to building insurance, sum insured calculations, and coverage options
Contents Insurance
How to value contents, specified items, and portable coverage explained
Landlord Insurance
Rental income protection, tenant damage, and investment property coverage
Business Interruption
Protecting business income, indemnity periods, and additional costs coverage
Strata Insurance
Understanding body corporate insurance and unit owner responsibilities
Flood vs Storm Damage
Critical differences that affect coverage and claim outcomes
Expert Tips from Restoration Professionals
Document Everything Before Disaster Strikes
Video walkthrough of your property annually. Photograph serial numbers, receipts for high-value items. Store in cloud. This documentation can mean the difference between full payment and significant shortfall.
Review Policy Annually
Building costs increased 20-30% in recent years. Renovations, new purchases, lifestyle changes all affect coverage needs. Set calendar reminder for renewal minus 30 days.
Understand Your Excess Structure
Basic excess plus potential additional excesses (age, earthquake, flood) can add up to thousands. Know total potential excess before claiming. Sometimes paying yourself is better.
Don't Underinsure to Save Premiums
Saving $200/year but being underinsured by $200,000 is false economy. Co-insurance clauses mean insurers can reduce ALL claims proportionally if you're underinsured.
Need Help After an Insurance Claim?
We work with all major insurers and understand policy coverage inside-out. Let us help maximise your claim and restore your property properly.