Household Insurance for Australian Home Owners
Buildings and Home Contents Insurance Protects Against Disasters
Sep 14, 2009
For most people their home is the most expensive asset they will ever own, so it would be catastrophic financially if it were to be destroyed or damaged and there was no insurance to cover for the loss. If home and contents insurance are in place the home owner can feel more relaxed about the consequences of a disaster if the worst should happen.
Recently there has been an increase in the number of homes that have suffered major damages from storms and floods and there is a general opinion that severe weather events will become more frequent as climate change accelerates. On top of this a home can be broken into and contents can be stolen as many houses are left empty for most of the day while the occupants are out working to pay the mortgage.
Household Insurance Covers Against Many Types of Events
Household insurance is designed to protect against loss or damage that can be caused by accidents, natural disasters, theft or acts of vandalism. This includes damage due to bush fires, floods, hail damage and damage caused by falling trees in high winds. Many Australian homes have been damaged in these ways over the past year alone. Other unexpected and unfortunate events that can cause damage or losses to households are explosions, landslides, vehicle impacts, plumbing ruptures, earthquakes, and house fires.
These types of events can ruin home owners financially if they have not planned ahead and purchased household insurance. For a premium that is relatively small compared to the cost of a home, it provides peace of mind knowing that if a house is robbed or vandalised, or if the buildings or contents are lost or damaged then the home owner will receive enough to replace or repair them.
Household Insurance Covers Buildings and/or Contents
What is covered by household insurance depends on the type of policy selected. The two major types of household insurance are buildings insurance and contents insurance. Building insurance covers the expenses required to reconstruct or renovate the main building, while household contents insurance will cover the expenses to replace and repair the contents of the house.
Is Household Insurance Mandatory?
Many financial institutions require the property to have household insurance when the owners apply for a home loan. This is because the financial institution makes it a condition of the loan, so that if there is a catastrophic event that destroys that home they know there is an insurance policy which will ensure they do not make a financial loss and the owner will still have the ability to repay them.
Without insurance home owners may have to use their savings to replace items that have been lost, or worse still they may not be able to afford to replace items, leaving them in a situation where they no longer have the things they worked hard to acquire.
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