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Learn how to choose a home insurance policy in four simple steps.
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When you see or hear an ad for insurance, you’ll usually be guided to “consider the Product Disclosure Statement (PDS)” when making your choice. This is because the PDS is intended to be the main source of truth that sets out the terms and conditions of a financial product, including what is and isn’t covered. In Australia, it’s a legal requirement for financial service providers (like NRMA Insurance) to provide a PDS document so you can make an informed purchasing decision.
What an insurance PDS typically includes:
Why reading the PDS is important:
A.I generated summaries, website content and blog posts, can provide really useful information about what you might expect from an insurance policy, but they might not go into as much depth or detail about all the conditions of a policy. This is why it’s important to look at the PDS alongside these helpful resources before making a decision; it goes into the specifics.
Learning the lingo:
Sometimes reading a PDS feels like reading another language. Here are some key terms you might come across, and what they mean in simple language:
| Excess | The amount of money you might pay if you make a claim. Sometimes an excess may need to be paid before a claim is settled. |
| Premium | The amount you pay each year to be insured. Sometimes it’s paid upfront, sometimes it’s paid in instalments. |
| Sum insured | The most an insurer may pay if you make a claim under your policy. For example, it may be based on the estimated replacement or rebuild value of your home and/or contents (subject to policy terms and conditions) and may be stated on your Certificate of Insurance. |
| Accident | A sudden, unexpected and unintended event that was not intended or expected. |
| Total loss | When an insurer finds something to be beyond repair, or if something is stolen and can’t be recovered. |
Risk refers to the chance of something going wrong, like a break-in or bushfire. The decision to purchase a home insurance policy is usually based on weighing up the likelihood of an unforeseen event occurring that may lead to financial loss. The policy may help offset some of that risk, so you’re not left entirely out of pocket should the unexpected event occur (provided the event is covered by the policy).
By understanding your home’s risks, you can make a more informed decision about the type and extent of insurance you might need. Get started by:
There are all sorts of policies available to suit different types of living arrangements and circumstances. Here’s a summary of 3 of the main home insurance policies people consider:
Generally covers the physical structure of your home and its permanent fixtures from events like fires, storms, floods and malicious damage (subject to policy terms and exclusions). Basically, if your home was tipped upside down, it’s the stuff that wouldn’t fall out that would typically be covered.
Who it suits: owner-occupiers, property investors.
What it can cover: walls, floors, roofs, garages, sheds and built-in appliances.
Generally covers the things you keep inside of your home from events like theft, fire, flood and in some circumstances, accidental damage (subject to policy terms and exclusions).
Who it suits: owner-occupiers, renters, apartment residents.
What it can cover: clothes, furniture, carpets and rugs, whitegoods, electronics, and more.
As the name suggests, this cover typically combines building cover with contents cover in a single policy (subject to the terms set out in the PDS).
Who it suits: owner-occupiers.
What it can cover: the physical structure of the home, plus your personal belongings.
Many different factors are used to determine home insurance premiums. Depending on the policy, this might include:
You may also want to check that you’re not under- or over-insured, as this may impact what you pay overall and the amount you may be able to claim. When working out the sum-insured amount for your home, contents or both, it’s often helpful to:
Only you can decide what type of home insurance may or may not be right for you, by considering all your personal circumstances alongside the ins and outs of any given policy. To do this, remember to:
1The Cordell Sum Sure Estimate is an estimate of the cost to rebuild the improvements on your property and is generated by the Cordell Sum Sure Calculator which uses available property attribute information (including information you input or confirm) and/or information collated by Cotality about the subject property (from insurers and other third party sources) and analyses them against construction industry data to statistically derive a rebuild estimate through a series of computer implemented algorithms (Cordell Sum Sure Estimate).
The Cordell Sum Sure Estimate does not take into account individual design features, site specific conditions, structural conditions and materials, local planning laws or any other regulations and may not be suitable for your particular circumstances. The Cordell Sum Sure Estimate is an indicative guide only and must not be relied upon as an accurate representation on the costs associated with rebuilding your property or in lieu or appropriate professional advice.
While Cotality uses commercially reasonable efforts to ensure the Cordell Sum Sure Estimate is current, Cotality does not warrant the accuracy, currency or completeness of the Cordell Sum Sure Estimate and to the full extent permitted by law excludes all loss or damage howsoever arising (including through negligence) in connection with the Cordell Sum Sure Estimate.
Information is current as at the date of publication and may be subject to change. All content on the NRMA Insurance Blog is intended to be general in nature and does not constitute and is not intended to be professional advice. It does not take into account your individual objectives, financial situation or needs. References to third-party organisations, products, services or brands on the NRMA Insurance Blog are for informational purposes only and do not imply any affiliation with or endorsement by NRMA Insurance, unless expressly stated otherwise.
