Published on 20/05/26 | Published by Aggie Klekowska
Home insurance rates can affect your first-home buyer budget more than you might expect. Along with your home loan repayments, council rates, moving costs and maintenance, your home insurance cost is part of the ongoing cost of owning a property.
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Home insurance rates matter because they can change the real cost of owning a home. A property may appear affordable when you only look at the loan repayment, but the budget can feel different once home insurance premiums, local council rates, repairs, utilities and other ownership costs are added.
Your lender may also require evidence of building insurance before settlement. This is because the property is used as security for the loan, so the lender generally wants to know the home is protected against certain risks. Your broker can help you understand the lending and settlement requirements, while your insurer or licensed insurance adviser can explain the policy details.
Home insurance is a general term that may refer to building insurance, contents insurance, or combined home and contents insurance. Building insurance usually relates to the structure of the property, while contents insurance usually relates to your personal belongings inside the home.
A home and contents insurance policy may include cover for insured events such as fire, storm, theft, attempted theft, escape of water and other events listed in the product disclosure statement. Each home insurance policy is different, so it is important to check what the policy covers, what is excluded and whether optional extras apply.
The cost of home insurance can be affected by the home’s location, age, building materials, condition, security, rebuild value and exposure to risks such as flood, storm, bushfire or coastal weather. Insurers also look at the level of cover, the excess you choose and any optional extras, such as accidental damage cover.
The building sum insured can be an important part of the pricing, along with the property’s location, risk profile, excess and selected cover. This is the amount the home is insured for if it needs repairing or replacing after an insured event, and it should be based on rebuilding costs rather than the property’s market price.
The sum insured is generally the maximum amount your insurer may pay under that part of the policy, subject to the policy terms, limits, exclusions and conditions. For building insurance, the building sum insured should generally reflect the estimated cost of rebuilding the home, not simply what you paid for the property.
This matters because the purchase price includes land value, location and market demand, while rebuilding costs relate to labour, materials, demolition, professional fees and current building standards. If the sum insured is too low, you may be underinsured and could face a shortfall after a serious event.
Insured events are the events listed in your policy that may be covered if they cause loss or damage. These may include fire, storm, lightning, theft, attempted theft, impact damage, escape of water and other events set out by the insurer.
Not every policy covers the same insured events in the same way. Some insurance policies include flood cover as standard, some offer it as an extra cost, and some may exclude it depending on the property and insurer. This is why reading the product disclosure statement is important before relying on the cover.
It is a good idea to compare home insurance before making an offer or during your due diligence period where possible. This can help you understand whether the home insurance cost is likely to fit within your budget before you are too far into the buying process.
When you compare home insurance, try to compare more than the first year’s premium. Look at the home insurance cover, excess, insured events, flood cover, temporary accommodation, legal liability, exclusions and the process for making an insurance claim. A policy with a lower price may not offer the same level of cover as another policy with a higher premium.
Cheaper home insurance may be possible in some cases, but the lowest price is not always the most suitable choice. A lower premium may come with a higher excess, lower sum insured, fewer insured events, limited flood cover or exclusions that matter for the property.
Some home insurance providers may offer an online discount if you take out a policy online. Others may offer a discount for combining home and contents insurance, increasing your excess, installing security features or holding more than one insurance product with the same provider. These options can reduce the first year’s premium in some cases, but you still need to check whether the policy covers what you need.
The product disclosure statement explains what the insurance covers, what is excluded, what limits apply and how claims are assessed. It is one of the most important documents to read before choosing a home insurance policy.
First-home buyers should pay close attention to the definitions of flood, storm, accidental damage, temporary accommodation, legal liability and personal belongings. It is also worth checking whether there are limits for valuables, portable items, fencing, retaining walls, sheds, pools, landscaping or other features that may matter to your property.
When comparing insurance policies, it helps to look at the details side by side. The home insurance premiums are important, but they are only one part of the decision.
What to compare | Why it matters |
|---|---|
Home insurance premiums | Shows the ongoing cost |
Building sum insured | Helps assess whether the rebuild amount is suitable |
Contents sum insured | Helps protect personal belongings |
Excess | Affects what you pay if you make a claim |
Insured events | Shows what situations may be covered |
Flood cover | Important for some locations |
Accidental damage cover | May be optional and may add extra cost |
Temporary accommodation | May help if the home cannot be lived in after an event |
Legal liability | May cover certain legal costs if someone is injured or property is damaged |
Exclusions | Shows what the policy does not cover |
Contents insurance may help cover the cost of repairing or replacing your personal belongings if they are damaged, lost or stolen due to an insured event. This can include items such as furniture, clothing, appliances, electronics and other household belongings, depending on the policy.
Some buyers focus only on building insurance because their lender requires it, but contents insurance can still be important. You may be able to take out a contents insurance policy online, combine it with building insurance, or compare contents insurance policies separately if that better suits your needs.
Flood cover is an important area to check because it can differ between insurance providers and properties. A home near a creek, river, low-lying area or flood-prone location may have different premiums, conditions or availability of cover compared with a property in a lower-risk area.
Do not assume flood cover is included just because storm cover is included. Check the wording in the product disclosure statement, ask the insurer how flood is defined and confirm whether flood cover is included, optional or excluded.
If you are buying an apartment, unit or townhouse, the building may be covered by strata insurance arranged by the owners corporation, or body corporate in some jurisdictions. This does not always mean your contents, internal items or upgrades are covered.
You should ask for the body corporate insurance details and check what the policy covers. In some cases, areas such as carpets, blinds, fixtures, personal belongings and internal improvements may need separate consideration through your own contents insurance or home and contents insurance.
If the property is an investment property, your insurance needs may be different from an owner-occupied first home. Some costs and risks may sit with the property owner, while others may depend on the lease, property type and insurance policy.
Landlord insurance may be relevant for rental properties, but it is different from standard home insurance. If you plan to claim rental property expenses, check current ATO guidance or speak with a registered tax adviser. If you are buying your first property as an investment, check the policy carefully and seek guidance from the insurer, your property manager and your broker where appropriate.
The right policy start date depends on your contract, state or territory rules and lender requirements. In many cases, buyers arrange cover before settlement so the certificate of insurance is ready when the lender requests it.
Your conveyancer or solicitor can explain when risk passes to you under the contract. Your broker or lender can also tell you what evidence of home insurance may be needed before settlement, including whether the lender’s interest needs to be noted on the policy.
Temporary accommodation cover may help with accommodation costs if your home cannot be lived in after an insured event. This can be valuable if the property is badly damaged and repairs take time.
The amount, time limit and conditions for temporary accommodation vary between insurance policies. First-home buyers should check whether it is included, how much is covered, and whether it applies to both building and contents claims.
Legal liability cover may help if you are legally responsible for injury to someone else or damage to someone else’s property. For example, it may apply in certain situations where someone is injured at your home and you are found legally liable.
The details can vary widely between policies, so do not assume every policy covers the same risks. Check the product disclosure statement and ask the insurer if you are unsure how legal liability applies.
Home insurance should be included in your budget alongside your deposit, repayments, conveyancing costs, moving costs, inspections, rates and ongoing maintenance. It is not part of your loan repayment, but it can still affect your household cash flow.
When reviewing loan options, first-home buyers often focus on the interest rate and repayment amount. Those are important, but lenders also assess whether the loan appears affordable based on your financial position, expenses, debts and their lending criteria. A simple budget should include your loan repayments, settlement costs, local council rates, body corporate fees if they apply, insurance, utilities, repairs and emergency savings.
A mortgage broker cannot choose your home insurance policy for you unless they are authorised to provide that service, but they can help you understand how insurance-related costs fit into your broader home loan planning. They can also explain lender requirements, settlement timing and how ongoing expenses may be considered when assessing your loan options.
Australian mortgage brokers are required to act in the best interests of consumers when providing credit assistance. This means your broker must act in your best interests when providing credit assistance and should consider relevant factors such as your needs, objectives, financial position and lender criteria.
Home insurance rates are an important part of first-home buyer planning. They can affect your ongoing budget, settlement preparation and confidence in managing the risks that come with owning a property.
The main things to focus on are the home insurance cost, the building sum insured, contents insurance needs, insured events, flood cover, excesses, exclusions and whether the policy covers practical supports such as temporary accommodation and legal liability. It is also worth comparing policies before settlement so you have time to ask questions and avoid rushed decisions.
Eurobodalla Finance can help you work through the lending side of your first-home buyer journey, including how your deposit, repayments, upfront costs and ongoing property expenses may fit together. Any loan option will depend on your circumstances, lender criteria and responsible lending checks. For guidance that considers your circumstances and goals, contact Eurobodalla Finance to talk through your home loan options before your next step.
How much home insurance costs will depend on the property, location, sum insured, insured events, excess, optional extras and insurer. A freestanding home in one suburb may have a very different premium from a unit, coastal property or flood-exposed home in another area.
No. Home insurance is designed to cover certain risks linked to your property, building and personal belongings. Health insurance is a separate type of insurance product that relates to medical and hospital-related costs.
Yes, many home insurance providers allow buyers to arrange a policy online. Some may also offer an online discount, but you should still read the product disclosure statement and check that the policy covers your needs before relying on it.
Your current insurer may be worth checking, especially if you already hold insurance products with them. However, it can still be useful to compare home insurance from different providers so you can review price, cover, exclusions and excesses.
If you need to make a claim, you usually contact your insurer, provide details of the event and supply evidence such as photos, receipts, reports or repair quotes. The insurer then assesses the claim based on the policy covers, limits, exclusions and claim conditions.
Book a free consultation with one of our loan specialist. Fill out the quick assessment form and we’ll help you with your loan.
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