Understanding how home and contents insurance works

Written by realestateview.com.au in Buying

When it comes to your home, it’s easy to imagine disastrous events from fires to burglaries happening at any time. With everything from precious jewellery to sentimental photo albums in your home, these thoughts can wreak havoc on your mind. Home and content insurance can help.

Home insurance explained

Home building insurance protects your home and the physical structures related to the building if anything were to happen to it. Examples of structures covered by these policies are the roof, fixtures and plumbing. Most mortgage brokers require home owners to take out home, or home building insurance.

Contents insurance explained

Contents insurance protects the possessions inside the house, including everything from your jewellery to your couch.

Home and contents insurance

Home and content insurance combines the two options above to protect both the structure of your home, and your possessions inside it. Buying both forms of insurance together is the most effective way to protect you and your family’s assets in the home.

How to set up a home and contents insurance policy

When choosing home and contents insurance, you must consider exactly what you wish to cover, and the level of coverage you want.

Consider what level of coverage you want

Basic Home and contents insurance must the replacement costs of your home, and your large ticket possessions if you were to be the victim of fire or burglary.

More advanced coverage will protect you from accidental breakages or damage. This can include everything from accidentally breaking expensive jewellery to a stain on your new white couch. Covering extra belongings beyond big ticket items will also add to the cost of your policy. If you have a very rare engagement ring that requires coverage for example, this will add additional cost.

Provide your insurer with details of your family and home

The insurer will want to know about your home, family and where you live to help determine their level of risk when insuring you. If you live near a flood plain in northern Queensland, your home and content insurance premium will be more expensive than if you live in an apartment in Melbourne’s CBD.

Similarly, if you have toddlers who may spill things on the carpet, tear your new couch or knock holes in the wall, you are considered more ‘risky to ensure’ than a single, middle-aged woman.

You may need to take photographs

Some insurers may require you to provide photographs of some of your contents and even your home to prove their condition before your policy becomes active. Much like car insurance, these photos are used to complete ‘before’ and ‘after’ comparisons in the event you make a claim for damage.

For example, ff you wish to insure jewellery in your policy, taking photos of the piece and providing certificates of authenticity are good ways to ensure your item is adequately represented in your policy.

Calculate your excess

When committing to a home and contents insurance policy, ensure your excess is affordable if an unfortunate event does occur. The excess is the amount of the insurance claim you pay, while the insurer pays the rest. Fire and burglary can seem so unlikely, but if they do occur, you need to be able to afford the excess you have agreed to.

How to make a home and contents claim

In the unhappy event you need to make a home and contents insurance claim, you will need to have proof of the monetary value of your home and its contents. The best way to prove ownership are receipts. If you own expensive jewellery, always keep receipts and proof of authenticity as these are exceptionally important when proving ownership and value in the event of damage or theft.

If you don’t have receipts, claiming your insurance can be more difficult, but many insurers accept a combination of other forms of proof such as:

  • Warranties and user manuals you received along with the goods when you purchased them.
  • Credit card or bank statements indicating when and where you purchased the goods
  • Videos or photos of your home with the item in situ. If you need to prove ownership of jewellery, photos of you wearing the piece may be considered as proof of ownership.
  • Spare parts or the original packaging the item arrived in
  • An affidavit by a family or friend attesting you owned the item

If your home is burgled, it’s important to be aware certain things can void your home and contents insurance claim. These include:

  • Not setting your alarm (or not having one)
  • Leaving the house unlocked
  • Failing to report the theft to police in a timely manner
  • Leaving your home unoccupied for too long
  • Providing an easy means of entry for thieves

Home and contents insurance is exceptionally important in the unlikely event of catastrophe at your house. Decide on the level of insurance you need, exactly what you wish to cover, and shop around for the best policy. While burglary or fire may seem unfathomable, the idea of losing the necklace your spouse gave you to commemorate your anniversary should motivate you to insure your home and contents.