With the cost of living constantly rising, making sure you’re paying a fair price for your home insurance is more important than ever.
Whether settling into your new home or you’ve owned one for years, you’ve probably come across building insurance. If you have a home loan, your bank will require you to have it, but beyond that, protecting your home is in your best interest. After all, it’s likely one of the biggest investments you’ll ever make.
To simplify what can sometimes feel like an overwhelming process, we’ve outlined three key steps to help you find the right home insurance at the best price.
1. Compare your options
Insuring through your bank
When you take out a home loan, your bank will typically offer insurance through their in-house provider or a preferred partner. Many homeowners go with this option for convenience as it means one less thing to research, and your insurance premium gets deducted along with your bond repayment.
Insuring through an independent provider
What many people don’t realise is that you don’t have to use your bank’s insurance. You’re free to shop around and get quotes from different insurers, which could save you money and get you better coverage.
It’s a good idea to get quotes from at least three different providers and compare:
- Monthly premiums
- Excess amounts (the amount you pay when you claim)
- What’s covered and what’s excluded
- Any hidden admin fees
Tip: Keep the excess amount the same when comparing quotes.
2. Insure your home for its replacement value – not its market value
A common mistake homeowners make is insuring their property for its market value instead of its replacement value.
- Market value: The amount your home would sell for, influenced by location, demand, and economic conditions.
- Replacement value: The cost to rebuild your home from scratch, including demolition, clearing debris, and professional fees.
If you insure for market value, you could end up either over-insured (paying more than necessary) or under-insured (risking a payout that won’t fully cover rebuilding costs).
Tip: A simple way to estimate your replacement cost is to break it down:
- The cost of rebuilding your home’s structure, excluding finishings.
- Additional costs for features like a pool, fireplace, or high-end finishes.
- Earth-moving costs if your land needs major work (e.g. after a flood).
A general rule of thumb is to add 20-30% to your base rebuilding cost to account for site preparation and unforeseen expenses.
3. Adjust your excess to suit your budget
Your home insurance policy will come with an excess – the amount you must pay out of pocket when you claim. Choosing a higher excess usually lowers your monthly premium, but it also means you’ll need to have that money available in case something happens.
Tip: Ask yourself: If I had to make a claim tomorrow, how much could I comfortably afford to pay upfront? That’s a good starting point for setting an excess that works for you.
Buying a home is a big milestone, and while the process of getting insurance may seem like just another admin task, taking the time to compare your options could mean better cover at a better price.
If you’re looking for building insurance or just want to check if you could be paying less, you can get a quick building insurance quote online with Naked in just a few minutes. No phone calls required, and if you like what you see, you can switch instantly.
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