Financial Service

Household Insurance 101: What You Need to Know

It doesn’t matter if you either own a house or are on rent, your possessions along with the physical building is important. The first thing we must do to protect our precious interests is to insure them. I’m sure most of us have insurance for our families so why not insurer our homes.

However just insuring the home isn’t enough, as tenants or homeowners we must be aware of the different types of home insurances and pick the right one for the circumstance. How do you it is the right one? The right insurance policy will give you peace of mind and reduce your financial burden of repairs orreplacing belongings

When it comes to insuring, you can opt to insure both the contents of the property and the property or just the property or contents.

The most common type of household insurances in Australia are:

  • Home Insurance – This type of insurance typically covers the financial costs that arise with loss or damage to the property.
  • Home and Contents – As the name suggests this covers both possessions and property damage or loss
  • Contents Insurance – This type of policy only covers the contents within the property
  • Tenant’s Insurance – This is generally a low-cost policy that protects tenants against unexpected events such as theft, fires or floods.
  • Landlord’sInsurance– Protects the interest of the landowner and reduces financial burden when renting out a unit
  • Strata Building Insurance – This is a split policy in which the premium is paid by both the management and the owner or tenant. It covers the common areas in a strata scheme and some fixed fittings inside the unit.

Out of all these types the most common type of insurance is the Home insurance, and this article will have a quick overview of what this main type of policy is.

What Is Home Insurance?

This type of policy is often referred to as property or building insurance as well. This insurance product is considered essential if you are planning on buying a home or already own a home/property. It basically covers damage to your property and also the legal liability. If you plan on buying a new home and you’re going to finance it with a home loan, the lender will typically require you to have home insurance.

How Much Should the Insurance Be?

The right cover for your home differs from person to person. However, it is very important to ensure that you are not underinsured but being over insured isn’t a problem.

Typically, your home insured value should match the replacement costs of your property. It should also include supplementary costs and expenses.

How Are Premiums Calculated?

Like the insurance, value differs between individuals the premium also depends on a list of factors. Different criteria that will be taken into account are,

  • The insured amount
  • The occupancy of your home
  • Material used for construction
  • The excess amount of the policy
  • Location of your property
  • How old your building is?
  • Activity conducted on the property
  • Government legal charges
  • Risk profile

These are only some of the basic information used to decide the premium. Settling on home insurance is a toughie and there is quite a bit of things involved. Your eves have to get your property inspected and evaluated by professionals.

Consult a professional insurer to know more about home insurance.

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