Insurance for your home is a requirement when you are a first-time home buyer and seeking a home loan. There are several types of homes and rental dwelling insurance policies. Two distinct residential insurance categories involve “total replacement” cover and “sum insured” cover. Total replacement covers the restoration of your property, and the sum insured provides a predetermined compensatory amount needed to repair or rebuild your property.
The five common forms of insurance policies for a home include the following:
- Building Insurance: this type of policy covers financial losses to your property and possessions. Losses due to certain damages like theft or natural disasters are at the top of the insurer’s list. Not having insurance for protecting your home or rental is not a legal requirement. However, when purchasing a home, your bank, solicitor, or seller will likely request that you take out insurance.
- Home and Contents: this type of policy involves both home and its content insurance. Fire cover insurance is generally standard. This insurance cover helps homeowners recover what they lost in the event of a fire that destroys their dwelling and possessions. The best feature of a home and content cover is that you are reimbursed when your home is damaged. Yes, suppose your home is severely damaged and is unliveable while repairs or rebuilds are being conducted. In that case, your home and contents insurance will reimburse you for costs accumulated by having to move and/or store your contents.
- Renters/Tenants: This type of policy provides a limited cover for hazardous events like a fire, flood, or theft associated with rentals. Which is a big chunk of Aussies? According to the Australian Bureau of Statistics, from 2017 to 2018, 32% of Aussie households were rentals. If your belongings were damaged or destroyed in horrible events like a flood, fire, etc., are you prepared to replace everything out of your pocket? Therefore, including renters and tenants insurance will help give you peace of mind and save you. So, when was the last time you took stock of all your belongings? It’s easy to underestimate the number of household belongings you have and therefore underinsure your contents. But, would you be prepared to pay for the damages caused by a fire, flood, storm, or other emergencies? No worries, mate, your renters/tenants insurance cover is very beneficial.
- Landlord: This type of home insurance policy covers owners and managers who own or oversee rental properties. Landlord insurance is a liability cover if tenants or people visiting them become injured on your property. Talk to your insurance agent because policies will cover landlords from tenants who break their rental contract early or if tenants default on their rent.
- Strata: this type of policy covers financial losses associated with damage or property loss. Strata operate under property titles that include company/corporate owners or a complex managed by a corporation. Generally, strata insurance covers outside building areas, i.e., balconies, gardens, pools, garages, lobbies, stairs, and more. Additional coverage includes nearly all of the fixtures, appliances, and equipment.
There are atypical insurance policies for varying homes, depending on where you live. But you can also receive additional coverage or a separate insurance policy, especially for your more valuable belongings.
- Accidental Damage Cover: If an accident occurs indoors or outdoors, this extra accidental cover keeps you safe. When you add accidental damage cover to your insurance policy, it helps to cover unintentional damages. This policy includes damage caused by accidents created by something you purchased that causes a harmful spill or other mishaps. Accidental damage coverage also can consist of accidents by portable electronics.
- Motor Burnout Insurance Cover: This is an optional homeowner policy. Motor burnout involves electrical appliances and equipment both within and outside the home, like swimming pool pumps or other pool units.
- Flood Insurance Cover: living near lakes, rivers, creeks, or other waterways during a bad storm can cause a flood that will infringe upon your property, causing expensive damage.
- Fire Insurance Cover: a household fire or even a bushfire event are fires that can wipe out your finances without this type of cover.
- Storm Damage Covers: Australia’s stormy seasons are from October to November. Coastlines are vastly affected by storms carrying winds that cause harm, lightning strikes that can fall trees, and stormwater that causes backup damage and destruction.