How much does home and contents insurance cost?

Home and contents insurance can cover the cost of repairing or replacing your home or belongings should they get damaged or destroyed. Here’s an overview of how much it costs in each state across Australia, according to Canstar Research.

What is home and contents insurance?

Home and contents insurance offers financial protection for your home and belongings against insured events such as fires, storms, floods and theft.

Home insurance (sometimes referred to as building insurance or home building insurance) covers the house that you live in and outbuildings such as garages and sheds. It also typically covers permanent fixtures on your property like fences, swimming pools and built-in air conditioners and dishwashers.

Home insurance can come in the form of sum-insured cover or total replacement cover. Sum-insured cover is more commonly offered. This involves estimating how much it would cost to rebuild your home if it was destroyed. On the other hand, total replacement cover covers you for the total amount it would cost to repair or rebuild your home. This is typically more expensive.

Contents insurance covers possessions within the house, such as furniture, electrical appliances and clothes. In some cases, it may also provide cover for portable items you take with you when you leave home, such as jewellery, although depending on your policy this may come at an additional cost. If you are renting, you’ll generally only need to consider contents insurance, as your landlord should have home insurance to cover the property you’re living in.

If you’re a homeowner, you may decide to have either home insurance, contents insurance, or a combination of both home and contents insurance.

Home insurance cost
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How much does home and contents insurance cost?

Factors that increase the risk of damage or destruction to your home and contents – and therefore increase the likelihood of a payout – will typically increase the cost of your home insurance. The level of cover you take out also generally affects how much you pay for it.

Here’s a roundup of some of the variables that insurers tend to look at when determining the the regular cost of a home insurance policy – your premium:

  • Whether you are covering your home, contents or both
  • How much you choose to cover your home and contents for (the sum insured or total replacement cover)
  • If you decide to add any optional types of cover, such as accidental damage, cover for portable items and motor burnout
  • How much excess you choose (this is the amount of money you pay if you need to make a claim)
  • Your claims history
  • Where you live (for example, if you live in an area that is prone to natural disasters or has a high crime rate)
  • Characteristics of your home
  • The security features you have

Average home and contents insurance costs

To give you an idea of costs, Canstar’s research team has calculated the average annual home and contents insurance premiums across Australia for policies on our database, based on the sum insured values of $550,000 for home or building cover, and $50,000 for contents.

State Home Insurance Contents Insurance Home & Contents Insurance
NSW $1,073 $404 $1,347
North QLD^ $3,940 $760 $4,349
QLD $1,322 $382 $1,561
VIC $933 $387 $1,204
SA $841 $353 $1,091
TAS $847 $295 $1,047
WA $1,058 $394 $1,328
Source: Based on quotes obtained for the 2019 Home & Contents Insurance Star Ratings. ^North QLD includes all areas north of Rockhampton.

To put that into perspective, this means the average cost of a home and contents insurance policy is about $3.70 a day in New South Wales, $4.30 a day in southern Queensland and $3.30 a day in Victoria.

How can you lower your home insurance costs?

Many insurers offer discounts for buying policies online and buying home and contents insurance together. For example, at the time of writing, 65% of insurers on Canstar’s database offer discounts for buying online and 80% offer discounts for buying home and contents insurance together. The average discount offered for buying online is 13% and the average discount for buying home and contents together is 11%. These averages are based on insurers on Canstar’s database that offer a percentage discount, but bear in mind that some insurers may instead offer a fixed dollar value discount.

Canstar has also rounded up some of the home insurance discounts that are currently on offer from insurers on our database. Consider checking with your insurer whether it’s possible to apply multiple discounts to your premium if you are eligible for an online discount as well as a home and contents discount, for example.

You may also be able to lower your home insurance premium by increasing your excess. Your excess is the amount you pay towards each insurance claim you make on your policy. Generally, the higher the excess you agree to pay, the lower your premium will be. If you’re considering increasing your excess, make sure that you can afford to pay this amount in the event you need to make a claim.

Some insurers may also lower your premiums if you install safety and security features such as security screens and alarms. Insurers may also charge lower premiums if you pay for your insurance annually rather than in more frequent instalments.

If you’re considering taking out a home and contents insurance policy, it can also be a good idea to shop around for better value.

If you’re comparing home and contents insurance policies, the comparison table below displays some of the policies currently available on Canstar’s database for an Australian aged under 50, seeking cover in NSW or ACT for a cost to replace building and contents of below $550,000. Please note the table is sorted by Star Rating (highest to lowest), followed by provider name (alphabetical) and features links direct to the providers’ websites. Use Canstar’s home insurance comparison selector to view a wider range of policies.

Is home and contents insurance tax-deductible if I work from home?

According to the Australian Taxation Office (ATO), employees generally can’t claim deductions for “occupancy expenses” like home insurance.

However, the ATO says you may be able to claim occupancy expenses if your home is your principal place of business. According to the ATO, you must have a dedicated work area that is unlikely to be suitable for domestic use – for example, if you had a hairdresser studio in your home.

The ATO also says you can claim occupancy expenses if your employer does not provide you with an alternative work location and you are required to dedicate part of your home to your employer’s business as an office.

How do I pay for home insurance?

Premiums can be paid annually or in regular instalments, for example in monthly or fortnightly payments. Some insurers charge higher overall premiums and fees if you choose to pay by instalments.

You might like to set up a direct debit to help make sure you pay every instalment on time. If you don’t keep up with your repayments, this could void or cancel your home insurance. For example, if you don’t pay a monthly premium instalment within 14 days after the deadline, some insurers say they may refuse to pay a claim. In addition, your insurance provider may cancel your policy altogether if an instalment is a month or more overdue.

Home contents cost
Source: Kite_rin (Shutterstock)

How to buy home insurance?

Each insurer will have its own process for setting up home and contents insurance, but generally it will involve you specifying what you want covered (home, contents or both), the value of your coverage (your chosen sum insured or total replacement cost), what extra events you wish to cover for an extra premium (for example, accidental damage, motor burnout and personal effects like jewellery and cameras) and how much excess you are willing to pay. You may also be asked to answer questions about your home and its occupants.

If you decide to switch home insurance, you’ll go through much the same process. If you switch to a cheaper policy, be careful to make sure you are aware of the level of cover you will be getting.

How do I make a home insurance claim?

You can usually make a claim over the phone or online. It is usually best to tell your insurer of any damage or destruction immediately, and to provide as many details as possible of the incident and how it happened.

You will often need to provide proof of the damage, so take as many photos as possible of any damage to your property or belongings. It’s also worth taking photos of your property or belongings when you first take out your policy, to help with proof of damage down the track. Some insurance companies have mobile apps so that you can upload the photos directly from your smartphone and upload your claim straight away using the app.

You may also need to provide evidence of ownership and value of any particular items that you are making a claim on. For example, this could include receipts, valuations, credit card statements and photos.

If you’re considering taking out a home and contents insurance policy, you can compare a range of policies using Canstar.

This article was originally published by TJ Ryan and Dominic Beattie.

Main image source: Nattakorn_Maneerat (Shutterstock)

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