Buying a home is one of the biggest financial moves you’ll make - so protecting it is essential, right?

House insurance - why it matters

For a start, banks won’t approve your mortgage without insurance!

To quote George Orwell, not all policies are created equal. Fine print matters - not when you're paying your invoice, but certainly when it’s time to claim.

And to quote everyone, you also get what you pay for. That's why insurance should be part of your due diligence before signing anything.

What to check for when buying a house

Insurers look at the condition of the home and its exposure to risks. Ask yourself:

• • Is the house well maintained?

• • Has it been rewired or replumbed? This is essential if built before 1945.

• • Does it have Dux Quest piping? Common in homes from the '70s and '80s, and a red flag for insurers.

• • Is the property on a slope or near retaining walls?

• • Are there signs of erosion, flood risk, or land instability?

Tools like the Natural Hazards Portal and Buying a Home Checklist can help you assess these risks.

Also check the property’s LIM (Land Information Memorandum) report - it will highlight risks like flooding, contamination, and any council-issued section notices that could limit your insurance cover.

How much cover do you need?

Most insurance policies are ‘sum insured’ policies, which covers the cost to rebuild the home using today’s materials and labour costs - not its market value or purchase price. It is capped at a dollar value determined by you. No pressure, right?!

You also need to factor in additional expenses like removal of debris, dumping charges, architectural, compliance and site preparation before you even start breaking ground. There are several calculators available to get it right - please ask us if you are interested?

As a rule, factor in $4,500 per square metre is a reasonable starting point. Simply multiply this by your total floor area in square metres.

Your broker will guide you thru this important decision.

But I don't plan to rebuild to the same size - I'm happy with a smaller home

That argument overlooks homes with partial damage, where repair costs - and timelines - can significantly exceed those of building a new home. This is due to challenges like sourcing matching materials, the extra labour involved in preparation, and the complexity of integrating new construction with existing structures. It's surprisingly easy to burn through (no pun intended!) your entire settlement.

Common pitfalls

• • Gradual Damage: Issues like slow leaks, rot, or mold are often only partially covered. Most comprehensive policies from brokers cap this at around $5,000, while basic 'direct insurer' policies may limit it to just $3,000.

• • Apartments & Multi-Unit Dwellings: Shared walls, roofs, and infrastructure add layers of complexity to both coverage and claims.

• • Retaining Walls & Fences: These are often overlooked but can carry significant rebuilding costs.

• • Rental Properties: If you're not using a reputable property manager, you will be required to conduct regular inspections yourself to maintain full coverage for certain claimable events.

• • Holiday Homes: If the property is vacant for extended periods (sometimes as little as 30 days with basic policies), you must notify your insurer or broker. Regular inspections will be required to maintain coverage - especially for issues like water damage or burglary.

 

In a flood zone?

Insurance is still possible with good flood protections, but you may face higher premiums or excesses. Insurers are moving toward risk-based pricing, so location matters more than ever. This means that the safer locations are not subsidising the riskier areas anymore. Be warned however – the ability to obtain comprehensive insurance for water-front property is only going to get harder with increased weather events.

Final word

Before signing a purchase agreement, talk to your broker and first make sure you can get cover (!) and is appropriate for your needs. Your home is your biggest asset - don’t leave it to chance.

(c) JenBro, Jul 2025