Home & Building Insurance
Comprehensive guide to understanding building insurance in Australia - what's covered, how to calculate the right amount, and critical features to look for.
Important Note
This guide provides general information about home and building insurance in Australia. Coverage varies significantly between insurers and policies. Always read your Product Disclosure Statement (PDS) and consult with your insurer for specific details.
What is Building Insurance?
Building insurance (also called home insurance) covers the structure of your home and permanent fixtures. It's designed to protect your most valuable asset - your property - from various risks and perils.
What's Typically Covered
- • The main dwelling structure
- • Permanent fixtures (built-in wardrobes, kitchen cabinets)
- • Outbuildings (garage, shed, granny flat)
- • Permanent flooring (carpet, tiles, floorboards)
- • Swimming pools and spas (in-ground)
- • Fences, gates, and retaining walls
- • Driveways and paths
- • Fixed light fittings
- • Plumbing and electrical wiring
- • Solar panels (if owned)
What's NOT Covered
- • Contents (furniture, appliances, personal items)
- • Portable swimming pools/spas
- • Garden plants and trees (unless fire damage)
- • Lawns
- • Temporary structures
- • Motor vehicles
- • Caravans and trailers
- • Items not permanently attached
- • Business equipment (needs separate cover)
- • Wear and tear/gradual deterioration
Calculating Your Sum Insured
Critical: Rebuild Cost ≠ Market Value
Your sum insured should reflect the cost to completely rebuild your home from scratch, NOT what you paid for it or its current market value. Land value is not included.
Rebuild Cost Should Include:
- ✓ Demolition and debris removal
- ✓ Architect and engineering fees
- ✓ Council/planning approvals
- ✓ Construction costs at current rates
- ✓ Site preparation
- ✓ Builder's margin
- ✓ GST
- ✓ Inflation buffer (20-30%)
- ✓ Upgraded building standards
- ✓ Landscaping restoration
2024 Average Rebuild Costs (per m²)
Based on standard quality finishes in Australian capital cities
Note: Add 10-15% for difficult access sites, 20-30% for heritage properties, and consider regional variations. Use insurer calculators for accurate estimates.
Types of Building Insurance Coverage
Total Replacement Cover (Rare)
Insurers guarantee to rebuild your home regardless of cost. Very few insurers still offer this due to extreme weather events and building cost escalation.
Pros:
- Complete peace of mind
- No risk of underinsurance
- Covers cost escalation
Cons:
- Very expensive premiums
- Limited availability
- May have strict conditions
Sum Insured Cover (Most Common)
You nominate a maximum amount the insurer will pay. This is the standard coverage type offered by most Australian insurers.
Pros:
- More affordable premiums
- Widely available
- Predictable coverage amount
Cons:
- Risk of underinsurance
- Must regularly review amount
- You bear cost escalation risk
Essential Inclusions to Look For
Alternative Accommodation
Covers temporary housing if home is uninhabitable.
Must Have: 10-20% of sum insured or 12+ months rent
Legal Liability
Protects against lawsuits for injury/damage to others.
Must Have: Minimum $20 million cover
Removal of Debris
Covers demolition and safe disposal costs.
Must Have: Included in sum insured
Professional Fees
Architects, engineers, surveyors for rebuild.
Must Have: 10-15% of rebuild cost
Flood Cover
Protection against riverine flooding.
Must Have: Check if included or optional
Building Standards
Covers upgrades to meet new building codes.
Must Have: Essential for older homes
Optional Extras Worth Considering
Accidental Damage
Covers unintentional damage like putting foot through ceiling. Worth it if you have children or are doing renovations. Typically adds 10-15% to premium.
Motor Burnout
Covers electric motor failure in pool pumps, air conditioners. Essential if you have pool or ducted air conditioning. Usually $50-100 extra per year.
Temporary Accommodation for Pets
Covers kennel/cattery costs if you can't take pets to temporary accommodation. Important for pet owners. Usually minimal additional cost.
Locks and Keys
Covers replacement if keys are lost or stolen. Can save $500-1500 per incident. Often included in comprehensive policies.
Environmental Upgrades
Allows green rebuilding options (solar, rainwater tanks, insulation upgrades). Good for environmentally conscious owners. May reduce future premiums.
Critical Exclusions You Must Understand
Always Excluded
- Gradual damage:
Rust, corrosion, slow leaks, rising damp
- Lack of maintenance:
Blocked gutters, unmaintained roofs
- Defective workmanship:
Poor quality repairs or construction
- Intentional damage:
By you or invited guests
Often Excluded (Check Policy)
- Flood damage:
May be optional extra
- Unoccupancy:
Damage after 60+ days vacant
- Earth movement:
Landslide, subsidence, erosion
- Tree roots:
Damage to pipes and structures
These exclusions cause most claim disputes. Read your PDS "General Exclusions" section carefully.
Smart Ways to Reduce Premiums
Increase Your Excess
Raising excess from $500 to $1,000 can save 10-20%. Only claim for major damage. Keep excess amount in emergency fund.
Install Security Features
Monitored alarms, deadlocks, security screens can reduce premiums 5-15%. Some insurers require these in high-risk areas.
Bundle Policies
Combining building and contents with same insurer saves 10-20%. Add car insurance for further discounts.
Pay Annually
Annual payment saves 5-10% versus monthly. Monthly payments include interest charges and fees.
Review Coverage Annually
Remove unnecessary extras. Adjust sum insured accurately. Compare quotes - loyalty doesn't pay.
Age and Claims Discounts
Over 50s often get 10% discount. No-claim bonuses can save 20-30%. Some insurers offer professional discounts.
Need Help With a Building Insurance Claim?
We work with all major insurers and understand building insurance inside out. Let our experts help maximise your claim and restore your property.