Getting the most from your home and contents insurance

Published September 2024 | 5 min read  
Words by Angela Tufvesson

When an unexpected event like fire^* or theft hits you on the home front, your home and contents insurance can provide vital cover. Here’s how to get the most out of your insurance and help make sure you’re adequately covered.

With the rising cost of living, it can be tempting to question whether you have room in your household budget for another expense.

But without home and contents insurance, a major disaster like a fire^* or storm^*, or a more minor issue like a burst pipe or theft of electronics, can end up costing you a lot more.

Underinsurance – when you don’t have enough insurance to cover the replacement value of the building or items you’re insuring – can also cause headaches and set you back financially.

Thankfully, there are some simple things you can do to get more out of your home and contents insurance, while also helping ensure you have enough coverage.

What does home insurance cover?

Home and contents insurance can help cover the cost of repairing or replacing your home and belongings if something goes wrong.

Home insurance (also known as buildings insurance) covers the building itself and the fixtures – like kitchen cabinets, plumbing and floor tiling. It can also cover separate structures like a garage and fixed air conditioning. If you’re renting out your property, you may also need to take out landlord’s insurance, which can cover you against things like loss of income if your property becomes unliveable due to damage by an insured event. 

Contents insurance is for homeowners and renters. It covers household items and personal belongings if they’re damaged by an insured event. Furniture, electronics, tools, jewellery, clothing, artwork and books are among the items that can be covered. Be sure to check your PDS for any limits that may apply to any contents items.

If you own an apartment or unit under strata, check whether the body corporate insures the building and to what degree. Floating floors, for example, may fall under contents insurance and be the owner’s responsibility to insure.

How much home and contents insurance do you need?

Everyone's insurance needs are different and the amount of home and/or contents cover depends on your circumstances.

The amount of cover you've chosen to insure your building is referred to as your 'buildings sum insured' and would typically be the amount it would cost to rebuild your home if it was totally destroyed.

Similarly, your 'contents sum insured' would be the value of all your contents should you need to replace them if they were destroyed in, say, a fire.

To figure out how much home insurance you need, you’ll need to calculate your ‘buildings sum insured’ amount. For contents insurance, go through every room in your home and estimate how much it would cost to replace each item if you were to buy it new at today’s prices. Smaller items can add up, so be sure to include things like crockery, shoes, kids’ toys and bed linen. 

These home buildings and contents insurance calculators can help you do the sums.

Your insurer will use this information to calculate the insurance premiums you’ll pay.

When you buy something new or change something in your home, it is best to take photos and store receipts electronically. At each renewal of your policy, consider updating your insured amount to account for any new purchases, home renovations or increased repair and replacement costs.

How to avoid underinsurance

Underinsurance is a big issue in Australia. As many as 80% of homeowners are underinsured, according to the Australian Securities and Investments Commission.

Some of the most common causes include inaccurately calculating how much it would cost to rebuild or replace your home and contents, not accounting for upgrades to your home and belongings – like a kitchen renovation or new lounge room furniture – and increased building, labour and replacement costs.

Accurately calculating the value of your property and belongings – and recognising that this amount may change over time – is key to avoiding underinsurance.

If you live in a disaster-prone area, it’s crucial to check the building codes your property needs to comply with and make sure you’re insured to cover any newer, more stringent requirements.

Flexible insurance payment options

Having flexible payment options can help you manage your insurance premiums. Consider whether paying annually or by-the-month better suits your needs^{^}.

Increasing your excess - the amount you'll need to pay towards a claim - may lower your premium⁺, but means that you'll need to contribute more in the event of a claim. With a higher excess you will also need to consider whether lodging a claim makes practical sense. For example, if your excess is $1000, you may not consider claiming for any minor damage up to that amount. It's important to weigh up the benefits against whether you could manage to cover any losses that fall under your excess amount. 

Maintain your home and keep it safe

Home and contents insurance is there to help when something goes wrong, but keeping your home safe and well maintained can reduce the risk of issues occurring in the first place.

Here are some things to add to your home maintenance checklist:

• Install and use locks on all windows and doors.
• Check your smoke alarms regularly.
• Think about installing a home security system.

When you go away on holidays, turn off electrical appliances and the water mains before you go, and ask a neighbour to keep an eye on your home.

Organise for professionals to check your plumbing and electricals regularly. A burst flexible hose under the kitchen sink or in the bathroom, for example, is a major cause of water damage in Australian homes. Regular checks can spot a rusty or twisted hose before it becomes a problem. 

Cover your home, inside and out

We understand the importance of safeguarding your home and belongings against the unexpected. Which is why we’re now offering HCF Home and Contents Insurance and HCF Landlord Insurance. Get a quote now^#.