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What you should know about building insurance

So, you’ve chosen the right property in the right suburb, you’ve chosen the right furnishings, you’ve even chosen the right doormat. Now it’s time to choose your insurance. Fortunately, you’re spoiled for choice when it comes to building insurance options and, better still, there’s plenty of help available to ensure you make a well-informed decision. Here are some practical points to consider when choosing the appropriate building insurance for you.

Getting the right cover

Whether you’re the new owner of a 14-bedroom waterfront mansion or a slick inner-city home, building insurance is a worthy investment. If the unexpected should happen, your home insurance is there to help you get back on your feet – but it’s crucial to choose a level of cover that’s appropriate for you, your property and your circumstances.

If you own a free-standing house, building insurance may cover you for damage to your home if disaster strikes. It typically covers the main structure of your home as well as any permanent fixtures, including kitchen cabinets, plumbing, built-in wardrobes and more.

If you want to cover the contents of your home, consider home and contents insurance. It can cover your household items and personal belongings in the event they’re lost, stolen or damaged in an unforeseen event. It will usually include items such as furniture, clothes, computer, fridge, washing machine, television, tools, art and jewelry.

What makes the task of choosing the right insurance tricky is the sheer number of insurers out there and the fine-print variables between each policy. A common trap many people fall into is winding up underinsured. While natural disasters and malicious damage are covered by most policies, accidental damage – and water damage in particular – isn’t, so it’s a good idea to read the Product Disclosure Statement (PDS) before agreeing to a new policy. Accidental damage is still available on most policies as an optional extra, but typically at a higher cost or premium. Working from home is another consideration that’s often overlooked. A building insurance policy may not cover business assets and activities, so if your home doubles as your office you may need a separate business insurance policy.

Types of policies

With so many building insurance policies on the market, it’s natural to feel a little overwhelmed by choice. To simplify the decision, first choose between the two main types of building insurance: sum-insured cover or total replacement cover.

  • Sum insured: A sum-insured policy can cover you up to a set amount to rebuild your home or repair any damage. This set amount is chosen by you, so a sum-insured policy may be a good fit if you know the value of your property. If you’re not sure what your home is worth, don’t fret – many insurers offer online calculators that help you find the value of your building. The main drawback of a sum-insured policy is the risk of ending up underinsured if your calculations are off. You can, however, change the amount of a sum-insured policy at any time to account for fluctuation in building and repair costs, or when the value of your home changes. Many sum-insured policies also include a safety net, which acts as a financial buffer if your sum-insured policy falls short of footing the bill. To make sure you don’t end up out of pocket, keep your sum-insured policy up to date.
  • Total replacement: A total replacement policy doesn’t require you to set a cover limit – instead, your insurer will cover the total cost of repairing or rebuilding your home if your claim is successful.  This type of cover can be more comprehensive than a sum-insured policy’s and, for this reason, it’s usually more expensive. But it’s often an intelligent choice if you don’t know what your home is worth and you want to minimise your risk of ending up underinsured. 

Compare home insurance

Once you know which type of insurance you need, you then have a choice between more than 100 registered Australian general insurers. Luckily, recent years have seen a market-driven boom in insurance comparison websites. But beware of their limitations. Website like Canstar have made selecting insurers easier than ever. Canstar has a team of expert researchers who identify which products offer Australians outstanding value by comparing price and product features which are awarded a 5-Star rating if they are in the top 10% in their field.

With so much jargon involved, it can be difficult to understand insurance policies. Fine print caveats such as exclusions, items or events not covered by the policy, and cover limits – which put a maximum on the amount you’re able to claim for certain items or repairs – are pieces of information to pay extra attention to.

To help you make an informed decision, it’s a good idea to draw up a list of the pros and cons of each policy your considering. This list can include points on your budget, the level of risk that comes with each policy and whether particular policy features are wants or needs.

Premiums are often negotiable, so don’t be afraid to shop around and ask insurers if they will match or beat the premiums of a competitor.

Choose wisely

Buying a home is often one of the biggest investments we make, so choosing a building insurance policy that will help protect that investment should be given careful consideration. And remember, everyone’s situation is different – what’s good for your neighbour might not won’t suit you. Do your homework, shop around and make an informed decision by following the tips we’ve given for your building insurance search.

Need Insurance?

Building insurance is help you can count on if your home or personal belongings are lost or damaged.

To learn more about BankSA’s building insurance, browse our different levels of cover here.   

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One of the biggest risks when considering home insurance is not taking out enough cover. In the event that your home and/or contents are completely destroyed, you may not have enough money to rebuild the home entirely or replace all of your possessions.

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Important information

The information contained in this article is general information only and is not specific to any product.  

It does not take into account your personal objectives, financial situation or needs and so you should consider its appropriateness, having regard to your personal objectives, financial situation and needs to these factors before acting on it.

Terms, conditions and exclusions apply to any insurance product. Please read the disclosure documents for your selected product or service, including the Terms and Conditions or Product Disclosure Statement, before deciding.

Cover is subject to your application for insurance being accepted.

Product Disclosure Statements (PDS)

Home and Contents Insurance Product Disclosure Statement (PDF 652KB) (applicable to policies issued or renewed on or after 5 April 2021)

Home and Contents Insurance Product Disclosure Statement and Supplementary Product Disclosure Statement (PDF 494KB) (applicable to policies issued or renewed in the period between 1 July 2019 and 4 April 2021)

Product Disclosure Statements (PDS)

Landlord Insurance Product Disclosure Statement (PDF 619KB) (applicable to policies issued or renewed on or after 5 April 2021)

Landlord Insurance Product Disclosure Statement (PDF 943KB) (applicable to policies issued or renewed in the period between 1 July 2019 and 4 April 2021)

This information does not take your personal objectives, circumstances or needs into account. Read the relevant PDS(s) to see if this insurance is right for you.

View the Retail and Business Banking Financial Services Guide, Credit Guide and Privacy Statement. (PDF 171KB)

Home and Contents Insurance is issued by Westpac General Insurance Limited ABN 99 003 719 319 (except workers compensation cover where applicable).  BankSA  – a Division of Westpac Banking Corporation ABN 33 007 457 141 (the Bank) distributes the insurance, but does not guarantee the insurance.