Your home is likely the biggest purchase you will ever make, yet many Melbourne homeowners are unsure exactly what their home insurance covers until they need to make a claim. One of the most common points of confusion is the difference between building insurance and contents insurance. Understanding the two, and how they work together, is the first step to making sure your home is properly protected.
What Is Building Insurance?
Building insurance covers the physical structure of your home. Generally, this includes the house itself and permanent fixtures that would not normally be taken with you if you moved. Depending on the policy, this can include:
- Walls, roof, floors and ceilings
- Built-in kitchen cabinets, benchtops and fixed appliances such as ovens and dishwashers
- Garages, carports, sheds and fixed outdoor structures
- Fences, gates, retaining walls and in-ground swimming pools
- Permanently connected plumbing and electrical fittings
If your home is damaged by an insured event such as fire, storm or impact, building insurance helps pay to repair or rebuild it.
What Is Contents Insurance?
Contents insurance covers the items inside your home that you would take with you if you moved. Think furniture, clothing, electronics, appliances that are not built in, jewellery, artwork and personal belongings. Many policies also offer optional cover for valuables you take outside the home, such as laptops, phones, watches and cameras.
Renters usually only need contents insurance, because the building is the landlord’s responsibility. Homeowners generally need both.
Combined Home and Contents Insurance
Most homeowners choose a combined home and contents policy. Having both covers with the same insurer can simplify claims, especially after a major event like a house fire, where the building and everything inside it may be damaged at the same time. A single claim with a single insurer can save time and stress when you need it most.
Common Events Covered by Home Insurance
Every policy is different, but home insurance policies in Australia commonly cover loss or damage caused by:
- Fire, smoke and explosion
- Storm, rainwater and hail
- Theft, attempted theft and malicious damage
- Escape of liquid, such as a burst pipe
- Impact, for example a fallen tree or a vehicle hitting your home
- Earthquake and, in many cases, flood (check this carefully)
Flood cover in particular varies between insurers. Some include it automatically, some offer it as an option and some exclude it in high-risk areas. If you live near a waterway, it is worth confirming exactly how your policy defines flood.
What Home Insurance Usually Does Not Cover
Home insurance is designed to cover sudden and unexpected events. It is not a maintenance plan. Common exclusions include gradual wear and tear, rust, mould, rising damp, pest damage such as termites, and damage caused by poor workmanship. Understanding these exclusions upfront can help avoid disappointment at claim time.
Sum Insured vs Total Replacement Cover
Most Australian home insurance policies are written on a sum insured basis. You choose the maximum amount the insurer will pay to rebuild your home. If you set this figure too low, you could be underinsured and left to fund the shortfall yourself. Rebuilding costs often include demolition, debris removal, architect fees, council approvals and compliance with current building standards, which can push the true figure well above what many people expect.
Some policies include a safety net that provides a buffer above your sum insured. A broker can help you understand whether this is included and how it applies.
Tips for Choosing the Right Home Insurance
- Use a rebuild cost calculator rather than your home’s market value. Market value includes land, which you do not need to insure.
- Make an inventory of your contents. Walk room to room, take photos and keep receipts for high-value items.
- Check your excess. A higher excess can lower your premium, but make sure it is an amount you could comfortably pay.
- Review your cover every year. Renovations, new purchases and rising building costs can all change what you need.
- Read the PDS, paying close attention to definitions, limits and exclusions.
Why Use an Insurance Broker for Home Insurance?
Comparison websites show you a price, but they rarely explain what sits behind that price. As a local Melbourne broker, Gidda Insurance Brokers takes the time to understand your property, your belongings and your budget. We compare options from a range of insurers, explain the key differences in plain English and help you avoid gaps in cover. If something goes wrong, we are there to support you through the claims process too.
Protect Your Home With Confidence
Whether you are a first home buyer, a growing family or downsizing, the right home insurance gives you peace of mind. Explore our insurance services or contact Gidda Insurance Brokers on 0491 999 555 for a friendly, no-obligation review of your home and contents cover.
This article contains general information only and does not take into account your objectives, financial situation or needs. Before making a decision, consider whether the cover is appropriate for you and read the relevant Product Disclosure Statement (PDS) and Target Market Determination (TMD). Gidda Insurance Brokers Pty Ltd is an Authorised Representative (No. 001307383) of Regis Licensing Pty Ltd ABN 71 130 820 727, AFSL 338156.
