Don't need contents insurance? Compare home buildings insurance in Australia.

Also known as house insurance or building insurance, home-only insurance is an insurance policy that only covers damage to your property’s physical structure. This includes the walls, roofs, floors and ceilings, as well as other buildings on the property like garages, garden sheds of granny flats. If your building is damaged or destroyed in an insured event, such as a fire or a flood, the insurer should pay your claim to cover the cost of repairing or rebuilding the property.

Home-only insurance does NOT cover your home’s contents – the possessions you keep in your home. For example, if your house burned down, a home-only insurance policy should cover the cost to rebuild it, but not to replace your furniture, appliances, electronics, and beloved keepsakes. To help safeguard these items, you could consider taking out a separate contents insurance policy or a combined home and contents insurance policy.

Because home-only insurance policies offer limited coverage, they may not be best suited to every homeowner. Be sure to consider what you want from an insurance policy, as well as your budget and financial situation, before deciding on an insurance policy.

Fire is an insured event that is covered as part of most home insurance policies, so you shouldn’t need to take out a separate fire insurance or bushfire insurance policy. But keep in mind that if you live in an area with a higher bushfire risk, your home insurance premiums could cost more. 

Home insurance isn’t a mandatory requirement for home ownership, like Compulsory Third Party (CTP) insurance for motor vehicles. Depending on your household budget, you may be able to avoid home insurance and save the cost of premiums, though you risk losing everything if disaster were to strike. 

That said, many mortgage lenders will require a borrower to take out a home-only insurance policy at the least before they will approve a home loan application. Insuring the building like this means that even if it’s damaged or destroyed, it can be repaired or rebuilt and continue to secure the home loan, reducing the lender’s risk. For example, if an uninsured home burned down and the borrower was unable to pay their mortgage, the lender may not be able to recover their money by repossessing and selling the now-destroyed property.

You may not need a home insurance policy in every situation. For example, if you have a home loan for an apartment or a townhouse, the building’s structure may already be covered by strata insurance.

Landlords may be able to benefit from a building insurance policy, as it can help to protect their investment if it is damaged or destroyed in an insured event. Because tenants are responsible for their own possessions, investors generally don’t need to worry about contents insurance policies, save to cover carpets, curtains, kitchen appliances and furniture.

Some insurers offer specialist landlord insurance policies, which cover all the same risks as home-only insurance, plus cover for investor-specific risks like damage caused by tenants.

If you live in a property but don’t have contents insurance, the possessions you keep in your house won’t be covered if disaster strikes. For example, if a flood swept through your neighbourhood, your home-only insurance should cover repairs to your walls, gardens, and fences, but you’ll need to cover the cost of replacing your ruined appliances, furniture, household ornaments and decorations yourself.

There are two main types of building insurance – total replacement and sum insured cover.

Total replacement cover will pay for the complete repair or rebuilding of your property if it is damaged or destroyed in an insured event, regardless of the cost. While this can provide some valuable peace of mind, it also means that total replacement insurance premiums tend to be more expensive.

Sum insured cover involves setting a maximum insured amount when you first apply for the policy. This sets a ‘cap’ on how much the insurer will potentially pay out if your property is damaged or destroyed in an insured event. You can select your own maximum sum when applying for your home insurance policy – the lower the sum, the lower the premiums you may pay. However, this puts you at higher risk of finding yourself underinsured if disaster strikes.

You could consider setting your sum insured amount to cover the estimated cost to rebuild your property from scratch if it was to be destroyed. This should let you be confident that you can recover if the worst were to take place. Because construction costs can change over time and building projects can blow out, a few home insurers offer “safety nets” where you can increase your sum insured by up to one third to cover the cost of a repair or rebuilding project.

It's possible to overinsure your property by setting your sum insured amount too high, but this could risk problems. Not only will this mean your insurance premiums are higher, but you may not get to access the full insured sum. If your home is damaged or destroyed, insurers don’t pay out the full sum insured as cash – they cover the cost of the repair or rebuilding project, without paying out any excess budget. Even if you opt not to rebuild your destroyed home and choose a cash settlement instead, this settlement will often be based on the assessed quote for repairs, rather than the sum insured amount.

Sometimes a property might sit vacant for a lengthy period, such as if an investment property is struggling to attract tenants, or if a holiday house only sees seasonal use.

Most home insurance policies include an exception for vacant properties, as these policies normally assume that the property will be occupied by the owner or tenants. If a property is left vacant for longer than a minimum period (often 30 to 60 days), it may mean paying an extra excess if you need to make a claim, or it may void the insurance policy altogether.

Homeowners that want to keep their insurance coverage on a property that they know won’t be occupied for some time may be able to contact their insurer about unoccupied home insurance options. You may be able to keep your cover, though the insurer may want you to take extra steps to protect the vacant home.