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What does home insurance cover?

What is home insurance and does it cover my belongings?

Purchasing home insurance is an important part of buying a property and being a homeowner as it provides you with financial protection should your home be damaged by external events. It is important to recognise that home insurance does not protect your personal belongings, but the actual building structure itself including garages, outer buildings and any permanent features (eg. inbuilt wardrobe or lights). Protecting your personal belongings falls under contents insurance, which is why many homeowners choose to bundle both insurance policies into one all inclusive “home and contents insurance”, however you do not have to do that.

Home insurance policies usually cover any property damage caused by natural disasters such as windstorms, hail, lightning, fire damage as well as man made damages like theft, arson and vandalism. It’s important to note that most home insurance policies do not cover floods and earthquakes, and so when deciding on a policy it’s important to think about your geographical location and what you need to be protected from.

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Before approaching different insurance companies to compare and find the policy that suits you, there are two different types of home insurance you need to decide on:

Total replacement cover


As the name suggests, this form of home insurance covers the cost of rebuilding your property to the same standard that it was prior to being damaged. This type of insurance reduces the chances of underinsurance occurring, which is when the payout of your insurance policy is not enough to adequately cover the cost of repairs or rebuilding and so the homeowner has to pay the difference out of their own pocket. In this way total replacement insurance can be considered more reliable, however it is only offered by a few insurers and if you were to suffer from total property loss it may take a significant amount of time until you have access to the funding as an insurer would have to carry out a full property assessment.

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Sum-insured cover


The more common of the two, sum-insured home insurance covers property damage costs up to a certain amount decided upon by you. The danger with this type of home insurance is that if the set amount you decided on is not enough to cover the total costs of your property’s repairs or rebuild, you will find yourself underinsured and having to make payments from your own account to cover the difference which may not be possible.

Regardless of which type of home insurance you choose, you need to be aware that ALL insurance policies have their own unique exclusions, limits, caps and clauses that then vary between insurance companies. Therefore, when deciding on home insurance make sure that you shop around to find the best cover and that you pay close attention to each policies product disclosure statement, so that you are aware of any loop holes in your cover.

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# Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
Lendi is a privately owned and operated Australian business. Our mission is to change the way Australians get home loans by providing a faster, smarter and more secure home loan experience designed around the customer’s convenience and needs. Although Lendi compares over 1600 products (2,500+ products including feature and pricing variations) from more than 35 lenders, we don't cover the whole market or compare all features and there may be other features or options available to you. While Lendi is 35% owned by founders and employees, we have also been supported by some great minority shareholders including Bailador, Macquarie Bank Ltd and a number of Australian sophisticated investors.
*WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees or other loan amounts might result in a different comparison rate. The comparison rates are based on a loan amount of $150,000 over a loan term of 25 years. Fees and charges apply. All applications are subject to assessment and lender approval. Quoted rate applies only to PAYG loans with LVR of 80% or less with security in non-remote areas. All applications are subject to assessment and lender approval.
IMPORTANT INFORMATION: Loan terms of between 1 Year and 40 Years are available subject to lender and credit criteria. Maximum comparison rate will not exceed 14.99% (see comparison rate warning above). Any calculations or estimated savings do not constitute an offer of credit or a credit quote and are only an estimate of what you may be able to achieve based on the accuracy of the information provided. It doesn't take into account any product features or any applicable fees. Our lending criteria and the basis upon which we assess what you can afford may change at any time without notice. Savings shown are based on user inputted data and a loan term of 30 years. All applications for credit are subject to lender credit approval criteria.
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