Your property is likely to be your largest investment so it’s a good idea to protect it. There are many different types of insurance you may want to consider when you are buying a property.
Home insurance (also known as home building insurance) can cover you for damage to your home in the event of storms, cyclones and bushfires, but not all insurers offer flood insurance. Most home insurance policies will also cover damage to other people and their property for an incident at your property. For lenders, home insurance is mandatory and must be taken out in order to meet your obligations under the loan contract.
The lender valuation will normally state the minimum value that your property must be insured for. Your lending specialist will guide you through this to ensure you meet the lender settlement conditions.
Contents insurance will cover financial loss caused by theft, loss or damage to your personal possessions and household furnishings, such as curtains, furniture, white goods, TV, clothing, jewellery etc.
Generally lenders don’t stipulate that you must have contents insurance – but it is a must have for you to protect your valuables! Most people bundle their home and contents insurance with the one provider.
Income protection insurance
Income protection insurance provides temporary cover if you are unable to work due to injury or sickness. Generally, you can be covered for up to 75 per cent of your income until you are able to return to work or the period of cover has expired. This ensures you are able to maintain day-to-day expenses, and cover any loan repayments during your recovery period.
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Renting your property to tenants will mean you will have some additional risks worth covering in order to protect your investment. Landlord insurance will usually cover your building for damage from fire, storms and other natural disasters. It will also usually include cover for fixtures such as light fittings and carpets. Some policies also provide rental income protection to cover loss of rent due to unpaid rent or if the property is uninhabitable due to damage.
A professional property manager can guide you on landlord insurance options available. Prominent real estate brands like LJ Hooker have property managers in all offices who understand the local market.
There are many different types of cover that fall under life insurance. Generally, life insurance provides cover in the event of death, however it can also cover you if you become permanently disabled, or are suffering from an illness and can no longer work.
Life insurance may be worth considering, or increasing if you have an existing policy, if you are taking out a home loan or investing further in property. In can protect your family should anything happen to you.
While all of these different types of insurances may seem overwhelming, they should be considered as part of the home buying process. There are plenty of places to get help. You can talk to your lending specialist, or visit websites such as moneysmart.gov.au or understandinsurance.com.au to find out more.
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This article is prepared based on general information. It does not take into account individual financial objectives or needs and is not financial product advice. Credit criteria applies to any loan application. Terms and conditions, fees and charges apply.