Owning a home in Australia is no less than a wonder, but not everything comes for free. Just like car insurance, you have to get home insurance and it’s one of the biggest parts of property financing. The main question is how much is home and contents insurance and how is the cost calculated.
The first thing you must know is the sum insured is not the market value of your property. The home insurance cost can cover most of the materials and damaged product replacement costs.
Replacement costs are undoubtedly high, but it also depends on your chosen insurance policy. But can home insurance cover the electrical appliances in your house? In most cases, the big appliances, yes, it can.
The higher the home insurance premium, the lower the replacement value. It is not a loss but not even a better thing.
We know how stressful all this policy talk is and trust us, we think the same. But there are some policies from the Australian Taxation Office that go in your favour. Now let’s get into the details of this topic.
What is home and contents insurance?
Almost everyone owns a car these days, and if you are fortunate enough to get hold of a house, you’ll know how expensive the cost of living is.
The bottom line is: owning things is costly. And this is because anything you own is prone to damage, whether due to burglary or mother nature. Home and contents insurance covers you financially if you are ever unfortunate enough to encounter damage to your property.
But what is an insured event? When you get an insurance provider, you mention a few events in the application that your area faces more often—for example, heavy floods, legal liability, and earthquakes. But there is no accidental damage cover for your home building insurance.
But are contents insurance tax deductible? No, they are not. If you upgrade your building, you must upgrade the contents sum insured. Even when getting a home loan, the lender will ask you to get contents insurance before they lend you the money.
Getting insurance premiums is okay, but the total sum insured will be less than what you get by upgrading from the premium. Temporary accommodation is sometimes a part of your home insurance. However, it varies from insurer to insurer.
How much does it cost?
Content insurance costs are pretty high these days. A contents insurance cost can sometimes be close to the worth of your house.
But will the contents insurance protect all the valuable items in your home? Lower premiums are more beneficial, as the Australian Taxation Office says.
One more thing is that combined home and contents insurance costs are different from only the contents replacement costs. Landlord insurance includes material costs and rebuilding costs. Sums insured for the landlord insurance are separate from home insurance.
If you feel like your long-time insurer is asking for more money than other insurance companies, it is unnecessary to stick with the same insurer.
And you must regularly review your insurance as it is better to be adequately covered than constantly worrying about the replacement cost.
The cost difference lies in what you want. If you are a landlord, you will need comprehensive home insurance, which includes rebuild costs and other factors.
However, a renter should only go for contents insurance because the household items are the only thing you need to cover.
After reading the articles on how to design your own home, let’s say you add an alarm system. Will it affect your insurance cost? Yes, it can, and it might increase the insurance premium. So it is better to include as many details as possible while getting the insurance. If your home insurance policy includes extra cover, there is a high chance of all your gadgets falling into the insurance coverage umbrella.
How to calculate and get home insurance
Home insurance is not easy to calculate. It all depends on how much you will pay to get the best coverage. You can go for a building-only policy which might include legal costs and accidental damage to the building. Or you can choose a contents-only policy if you are a renter.
The area you live in has a significant impact on your insurance. Suppose you live near the coast and are prone to floods, the insurer will need to add it to the policy, and the price might increase. Your land value and other factors also go into consideration during the insurance policies.
Last but not least, your claims history can significantly impact your insurance policy. While getting home insurance, the insurer will ask you questions to understand the worth of your house and the replacement cost. They will then ask about all the valuable items in your home.
You might also seek advice from the insurer about what you should or should not include in the policy. These guys have years of experience and know what matters the most.
