Buying a home
Insurance – When might you need this and what might you need?
Insuring your new home
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 done so well and come so far in your home-buying journey and you’re getting ready to buy your new home.
By now, you would have factored in some of the costs you are about to face: paying the deposit, conveyancing fees and building inspections, to name a few. One cost you cannot afford to forget is insuring your new property.
Aside from protecting your financial investment, your lender may insist on proof of adequate insurance as a condition of your home loan. If you’re not sure whether this applies to you, have a chat to your mortgage broker or home loan specialist. But even if insurance isn’t a requirement, it’s still a good idea.
When to take out insurance
Up until the contract is signed, the seller is responsible for insuring the property. After the contract is signed but before you take possession on the settlement date, the seller is still technically responsible for maintaining the property; if you conduct a pre-settlement inspection and find that the house has been substantially damaged since you signed the contract, that contract could be voided.
However, even if the seller takes responsibility for any damage, you could still be inconvenienced. The repair process could delay your moving-in date, leaving you with a truck full of furniture with nowhere to furnish. 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 is enough for a lot of people, at least for a few years. Also, while it is a good idea for the seller to maintain their insurance through to the settlement date, there’s no guarantee that they will. For this reason, you should consider arranging for your new home to be insured from the date of the contract signing, not just from the settlement date. This will ensure that the property is insured and damage from insured events is covered. With a home building insurance policy appropriate for you, you’ll sleep better knowing you actually have somewhere to sleep.
Types of property insurance
You should make sure that Home Building Insurance is organised as early as possible, and that the policy begins on the day that your contracts are exchanged. Suncorp Home Building insurance covers the house itself, including all permanent fixtures—that’s your windows, walls, built-in wardrobes, etc.—as well as other permanent structures on the land. This includes things like pergolas, garages and carports.
While it’s less urgent, as you probably won’t have contents in the house until after settlement, at some point you may want to consider Contents Insurance. This is insurance that’ll cover all the stuff that you intend to move into the house, like your furniture, appliances, and the 4K Ultra HD TV that will take pride of place in your new living room.
Make sure that you know what your policy covers before you move. Certain contents insurance policies won’t cover contents in transit, or will only do so if an additional cover is selected. The moving process is stressful enough without damage to your valuables that won’t be covered, so you should check your PDS or contact your insurer to make sure you know what’s included.
Building and Contents Insurance
While you may consider them separately, given the dates from which you’ll require them, you may get a better deal if you take out a combined Home and Contents Insurance policy.
The information is intended to be of a general nature only. We do not accept any legal responsibility for any loss incurred as a result of reliance upon it – please make your own enquiries.
Any advice contained in this document has been prepared without taking into account your particular objectives, financial situation or needs. For that reason, before acting on the advice, you should consider the appropriateness of the advice having regard to your own objectives, financial situation and needs. Where the advice relates to the acquisition, or possible acquisition, of a particular financial product, you should consider the Product Disclosure Statement (PDS) making any decision regarding the product. Contact us for a copy.