Buying a home

How much should I insure my house for?

10 October 2017

Moving In: How much should I insure my home for?

Home insurance, also known as building insurance, covers damage to the building itself, not the contents inside it like your furniture.

If you’ve just bought your first home for $650,000, you might assume that’s the exact amount you need to insure it for.

But, the price you paid is not the same thing as the cost to rebuild your home.

Land value and house value are different. It can be tricky to accurately estimate how much it would cost to completely rebuild your home, unless of course you happen to be a builder.

Building costs fluctuate from year to year, and they’re affected by construction demand as well as building materials and labour costs.

If you’ve bought in a flood or bushfire zone it’s very important to feel confident your house is adequately covered. In storm season trees fall on houses and roofs get damaged.

And in winter house fires happen from electrical faults, heaters failing or being knocked over and electric blanket failures.

You’ve gone the hard yards in your home-buying journey, and you’re finally getting ready to make your purchase. Congratulations!

One thing you might be wondering, though, is how much you should insure your new home for. Protecting your investment is important, so choosing the right level of cover isn’t a decision you should make without being informed.

Explore Suncorp Home Insurance

When to take out insurance

Even after the contract is signed (before you take possession on the settlement date), the seller is technically responsible for maintaining the property. That means if you conduct a pre-settlement inspection and find the house has been substantially damaged since you signed the contract, you can void the contract or ask the seller to pay for repairs.

But even if the seller takes responsibility for any damage, it can still be inconvenient. The repair process could delay your moving-in date. Or, if the damage is substantial enough to void the contract entirely, you may have to start the house hunting process over again … and once every few years is enough for most people.

So, consider arranging insurance for your new home from the date of the contract signing, not just from the settlement date. This way, any damage from insured events will be covered.

Types of property insurance

Building insurance

Most building insurance policies, including Suncorp’s Home Building Insurance, cover the house itself. That includes permanent fixtures, such as your windows, walls, and built-in wardrobes, and permanent structures on the land, like pergolas and carports.

If you’re considering building insurance, you should organise it as early as possible. The policy should ideally begin on the day that your contracts are exchanged.

Contents Insurance

Contents insurance covers the stuff inside your home, like your furniture, appliances, and other belongings. It’s a little less important to have this cover at the time of contract signing, as you might not have contents in the house if you haven’t taken possession yet. Still, you should aim to have it once you start moving things in.

Building and Contents Insurance

While you may consider them separately, you can often get a better deal if you take out a combined home and contents insurance policy. This type of policy, as the name suggests, covers both the building itself, and the contents you own inside of it.

Figuring out how much to insure your home for

Once you better understand when and what kind of policy to take out, it’s time for the fun part – working out how much to insure your home for!

How much building insurance do you need?

You might think it’s a simple case of, “my home is worth $650,000, so that’s how much I’ll insure it for.” However, the amount you paid for your home is not the same as how much it would cost to rebuild it.

Building costs fluctuate every year, affected by construction demand and the costs of labour and building materials. Suncorp’s Buildings Insurance Calculator can help you estimate the cost to replace your home. Remember, if you renovate or update your building, it’s important to upgrade your insurance policy too, so you’re still covered in case something happens.

How much contents insurance do you need?

Working out your sum insured (how much you’re covered for if something happens to your insured belongings) can be daunting. Where do you even begin?

But don’t worry — we can help with our Contents Calculator. Just as with your building insurance, if you make any big purchases, ensure your policy’s sum insured reflects the increased value of your contents, so you’re covered.

Working out how much to insure your home and belongings can take a bit of time and effort. However, for the peace of mind it can bring you, it can be well worth it.

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Insurance is issued by AAI Limited ABN 48 005 297 807 trading as Suncorp Insurance. Consider the Product Disclosure Statement before making a decision about this insurance. This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it.