Home insurance: What is actually covered?

Having home insurance is by far one of the best ways you can help protect your assets. However, it’s important to know what your policy covers and what you may be liable for should anything happen.

Home insurance types

Depending on the cover you require, insurers generally offer:

• a “home” policy: this covers the building and fixtures
• a “contents” policy: this covers loss or damage to the contents and fittings contained in the premises
• a “combined” policy: this includes cover for both home and contents

If you’re a landlord, you’re probably not all that interested in protecting the contents that belong to the tenant. A home policy tailored to rentals (landlord insurance) would be the ideal cover for you.

If you’re looking to protect the home you live in, you probably want a combined policy to protect your premises as well as the things inside it.

Product disclosure statement: your insurance bible

Your policy’s product disclosure statement (PDS) is your complete guide to everything that is and is not included in your insurance policy.

Be sure to request a copy of it from your insurer and read through it thoroughly – and make sure you keep it somewhere you’ll remember for future reference, in case of an accident.

You may find after reading your PDS that a number of items you expected to be covered are in fact excluded from the policy, or optional provided that you pay an additional premium.

These can include:

• accidental damage (dropping a plate on the floor and breaking a tile)
• electrical and motor burnout (caused by a power surge or faulty wiring)
• temporary accommodation (in the event your property becomes uninhabitable)
• portability (if contents are damaged, lost or stolen from a place other than the insured premises)

You may also find that recovery limits apply to items such as building approval fees, jewellery and collectables.

On the flip side, your policy may surprise you with inclusions you had not considered you needed, such as cover for funeral costs, public liability or moving house.

You may even get additional discounts for customer loyalty, applying online or having other policies with the same insurer.

There’s also the issue of paying an “excess” to make a claim – many insurers now allow you to adjust the level of excess to help with your monthly or yearly premium repayments.

Don’t get caught being underinsured

When calculating your home and contents insurance, it’s better to be safe than sorry. By overestimating the value of your home and contents – including the size of rooms and value of your furnishings – you have a better chance of recovering that same value in the event you lose your home due to, for example, fire or severe weather.

If you have items that are of a particular value such as an engagement or wedding ring, be sure to list these separately on the policy. You may pay extra each year or month, but you’ll have peace of mind knowing that you’ll be able to recoup the cost of these items in an insurance event.

Comparing home insurance policies is ultimately like comparing apples and oranges: no two are the same. But with a little bit of time and research, you can relax knowing that your assets are protected when it matters most.