Home and Contents: Coverage to look for in a policy

17 August 2015

Home and contents insurance is a grudge purchase: something we need to have but would rather not have to use. Nevertheless, it’s worth spending some to ensure that the policy you have suits your needs. While different inclusions will be important to different households, here are a few common should-have features.

There are generally three types of cover contained in a home and contents insurance policy – public liability, accidental damage, and defined events. We’ve explained these concepts in more detail below.

Defined events

What is a defined event in home insurance? Defined events are an event you are insured against, including theft or malicious damage, and acts of nature (think earthquakes, storms, and bushfires). Defined events can also be called insured events.

It’s important to consider what types of events you would need included within your policy based on your location; usually insurers in Australia will cover most defined events, but you should always check the product disclosure statement (PDS) before signing up. The Insurance Council of Australia has some useful information on the types of natural disasters that could potentially affect home owners and renters in Australia, as follows:

Bushfire – September to March is, not surprisingly, peak bushfire season in Australia. With increasing urban development and a climate that is both getting drier and warmer, bushfires are an increasing risk for today’s property owners. Ash Wednesday, Black Christmas, Black Saturday, and the Tasmanian bushfires are all events that quickly spring to mind. You can read more about bushfire preparation and bushfire cover here.

Cyclones – More common in the tropical areas, the Insurance Council advises that the majority of cyclone-related property damage occurs in Northern QLD, NT and WA between December and April. You can read more about cyclone preparation and cyclone cover here.

Hail – Hail doesn’t discriminate between regions or seasons and both NSW and QLD have had severe hail damage in recent years. The worst months for damaging hail are during the warmer months, from October to April, though hail can occur at any time. The 2014 Brisbane hailstorm alone caused approximately $1.34 billion of insured loss. You can read more about storm damage cover in general here.

Flood – Flood damage has been a significant cause of financial loss in recent years. Inland flooding is also a significant issue in Australia, historically accounting for nearly one third of insured losses. Read more about flood preparation and flood cover here.

Severe Storms – The worst affected states are NSW and QLD, followed by WA, VIC, SA and TAS. Most severe storms have occurred between September and February – although the NSW storms in April 2015 caused approximately $922 million of insured damage. You can read more about storm preparation and storm damage cover here.

Theft – If your property is broken into, there is not only the chance that your possessions have been stolen or damaged in some way, there is also likely to be damage to the house (windows or doors) thanks to forced entry. “Forced entry” can include access gained with stolen keys – but be aware that it may not cover unlawful entry gained by opening an unlocked door or window.




Fusion insurance

Fusion damage means motor burnout. Think refrigerator, freezer, washing machine, air conditioning, hot water system, pool filter … anything with a motor. So when the motor on your freezer gives up the ghost and your food is destroyed, it’s fusion cover that has your back. Insurers may add an extra cost for this cover and may limit the age of the motor that will be covered. It’s nevertheless a useful inclusion. We’ve written more about what you need to know about fusion insurance here.


Accidental damage

What is accidental damage? Accidental damage or accidental breakage is fairly self-explanatory – it means damage or breakage of glass items. Accidental damage insurance or accidental breakage cover is cover that can be included in home and contents policies as a standard or additional cover to pay for the repair or replacement of broken glass or ceramic items.

In terms of contents insurance for your personal belongings inside your home, accidental breakage cover could include breakage of picture frames, your reading glasses, and general kitchen items such as glass cooktops. In terms of building cover home insurance, accidental breakage cover could include a mis-hit cricket ball that breaks a window.

Always keep in mind your excess, the amount of the repairs or replacement cost that you have to pay before your insurance kicks in. Small breakages are probably not worth claiming if the excess is going to cost as much as your whole repair job.


New for old

When it comes to the replacement of any lost, stolen or destroyed items, ensuring that you have “new for old” cover can be the difference between receiving a replacement item or receiving a small sum of money to put towards replacement. New for old cover means your insurer will replace the items being claimed with new items or repair them with new materials that are available at the time of replacement or repair from Australian suppliers. We’ve written more about new for old replacement cover here.


Public liability

What is public liability cover? Public liability cover is protection against legal expenses and damages (compensation) you would have to pay if someone sued you for an accidental injury they had while visiting a property you own. Homeowners and landlords need public liability cover – even if you’re just a landlord on Airbnb or Stayz.


Of course, there’s much more to a home and contents insurance policy than just the cover we’ve listed above. Each year Canstar research and rate over one hundred home and contents insurance policies across Australia to determine which ones offer customers outstanding value for money. You can read more about home insurance or compare your home and contents insurance options on our website:

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