Insurance options when buying a home
Buying a home is a big financial commitment so it makes sense to insure your property and self. It’s also an important consideration to ensure you don’t default on your loan, or worse still, be placed in a foreclosure position.
Here are some types of insurance you might like to consider:
Building and contents insurance
Building insurance covers the fixtures, fittings and any structural improvements of the home. Building insurance is required by the lender to ensure that the financial investment is covered in the event of a number of factors occurring, for example: fire & explosion, accidental damage and flood. The cost of building insurance is calculated based on the type of cover chosen, any additional options, the sum insured, the type, location and age of the building, and excess payable.
Contents insurance covers what’s inside the house, such as furniture, jewellery and other valuables and personal effects. There are different levels of contents insurance depending on the value of the possessions you have in your house, whether the items are rare or precious and if you’d like cover for items outside the home.
Getting both building and contents insurance is a great way to protect the assets you’ve worked hard for and offers peace of mind knowing that you’re covered in a number of scenarios.
If you’re buying the property as an investment, landlords insurance can cover you for events such as malicious acts by your tenant, rent default and theft by tenant.
Owners corporation (body corporate) insurance
There is a minimum insurance requirement for owners corporation properties, but you may also decide to increase this level of cover depending on your needs. Find out more on the Consumer Affairs Victoria website.
Loan protection insurance
Loan protection insurance (also known as consumer credit insurance) provides some cover for the loan repayment if you are injured in an accident, fall ill or suffer a covered trauma and are unable to work, if you become unemployed or pass away. Depending on the type of cover, if there is a claim the money may be paid to you or directly to the lender.
Life insurance (sometimes referred to as ‘death cover’) provides a set sum of money when you die – normally to your nominated beneficiaries.
Total and permanent disablement (TPD) cover
TPD provides a payment if you are totally and permanently disabled, to cover costs of debts, rehabilitation and living expenses.
NB: Life and TPD cover are often available through your superannuation, so it pays to speak with a professional when looking at insurance cover to make sure it is right for you.
Income protection provides a replacement income if you are unable to work due to injury or illness and may assist with making your mortgage repayments during this time.
Provides cover if you are diagnosed with a certain illness or injury (e.g. stroke, cancer, heart attack or coronary artery surgery).