Key takeaways
- Building cover is for the structure; contents cover is for your belongings — owners usually need both.
- Sum insured should reflect rebuild cost, not market value or purchase price.
- Flood definitions vary between insurers — read the PDS carefully.
Home insurance splits into building and contents cover. Getting the sum insured right and understanding exclusions — especially flood — is where most Australian households go wrong.
On this page
Building vs contents
Building insurance covers the physical structure. Contents covers possessions inside. Renters need contents only; strata owners often need contents plus any fixtures beyond the standard fit-out.
| What's covered | Building | Contents |
|---|---|---|
| Walls, roof, permanent fixtures | ||
| Furniture and appliances | ||
| Theft of belongings | ||
| Fire damage to structure | ||
| Storm damage to roof | Varies | |
| Flood (varies by policy) | Varies | Varies |
| Legal liability on property |
Renters typically need contents only. Strata owners should check what the body corporate covers before buying building cover.
Getting sum insured right
Building sum insured should reflect full rebuild cost at current construction prices — not market value. Construction costs have risen sharply since 2020; many households are underinsured. Use insurer rebuild calculators and itemise contents room by room.
Defined events vs accidental damage
Defined events policies list covered perils (fire, storm, theft). Accidental damage is broader — covering incidents like a child breaking a TV. Accidental damage costs more but reduces gaps.
Common exclusions
Flood definitions vary — some policies exclude river flood but cover storm water. Gradual deterioration, pest damage, and intentional acts are commonly excluded. Read how your insurer defines flood vs storm surge.
Important
How to compare home insurance
Match sum insured, excess, and optional covers across quotes. Check sub-limits for jewellery, electronics, and bicycles. Compare at renewal — loyalty rarely pays.
General information only — not personal financial advice. Consider your own circumstances and read the Product Disclosure Statement (PDS) before purchasing any policy. Moneyhero may earn referral fees from some providers when you switch through us; this does not change how results are ordered. How we compare
Frequently asked questions
Home and contents insurance — sum insured, exclusions, and how to make sure you have enough cover.
How much home insurance do I need?
Building cover should equal rebuild cost. Contents cover should equal the replacement cost of all belongings. Most households underestimate contents by 30–40%.
Does home insurance cover flood?
Varies by policy. Some cover flood; others exclude it or use narrow definitions. Storm damage is more commonly covered than river flood.
Do renters need home insurance?
Renters need contents insurance for belongings. The landlord's building policy does not cover tenant possessions.
What is underinsurance?
When sum insured is below actual rebuild or replacement cost, you bear the gap at claim time. Insurers may apply averaging clauses.