Home building insurance: what it covers and how much you need
Home building insurance pays to repair or rebuild the structure of your home, including permanent fixtures like plumbing, built-in cabinetry and fitted appliances, and usually other structures on the land such as garages, fences and an inground pool, after damage from an insured event. It usually also includes legal liability cover for injuries on your property.
It is the policy that protects the most expensive thing most people own, and the most common mistake with it is the amount insured, more than the choice of insurer. The rebuild cost of a house is a different number from its market value, and it is usually the rebuild number that people get wrong. Our guide to home and contents insurance compares building, contents and combined cover.
By Better Rate Mate Editorial Team ยท Last reviewed
General advice only. It doesn't consider your circumstances. Read the PDS and TMD before you decide.
What counts as the building
The building is the home itself plus anything permanently attached to it: walls, roof, floors, internal fixtures, built-in wardrobes and kitchens, fixed heating and cooling, hot water systems and solar panels. Most policies also cover outbuildings, driveways, retaining walls, fences, gates and inground pools, although some structures (for example retaining walls not built to engineering standards, or fences shared with a neighbour) come with conditions.
Moneysmart flags two definitions that catch people out: an inground pool is commonly part of the building while an above-ground pool may not be covered at all, and a granny flat is usually covered unless you rent it out. If part of your property is used differently from the rest, tell the insurer.
What building insurance covers and excludes
Building insurance is a listed-events policy: it pays for damage caused by the events the PDS names, and the names are broadly similar between insurers. The differences are in the conditions attached to each event and in the options. This is how two current PDSs set out the main events.
Both PDSs exclude the same broad causes: wear and tear, rust and gradual deterioration; damage by vermin and insects, including termites; mould (NRMA covers it where it results directly from covered water damage); faulty design or workmanship; poor maintenance; tree roots; and earth or soil movement. Both also limit cover when the home is left unoccupied for more than about 60 days in a row, unless it is kept in a lived-in state (NRMA) or Allianz agrees in writing.
| Event | NRMA Home Insurance (PDS 10 Sep 2023) | Allianz Home Insurance (PDS 1 Apr 2025) |
|---|---|---|
| Fire | Covered | Covered, including smoke, bushfire and grassfire |
| Storm | Covered | Covered, including cyclone and rainwater |
| Flood | Flood or rainwater run-off covered; customers in NSW, the ACT and Tasmania may be able to remove it (new policies from 16 November 2025, renewals from 31 December 2025) | Flood or run-off covered, but not in the first 72 hours of a new policy or a cover increase |
| Escape of liquid (burst pipes) | Covered, but not leaks from a shower recess or base | Sudden escape of liquid covered; gradual leaks you should have noticed, and shower leaks, are not |
| Earthquake | Covered, including landslide within 72 hours | Covered, with tsunami, and an extra $250 excess |
| Impact | Covered: vehicles, aircraft, falling trees and aerials | Covered |
| Vandalism and malicious damage | Covered as a deliberate or intentional act | Covered |
| Accidental damage | Included with Plus cover; optional with Standard | Optional |
| Electric motor burnout | Optional, for motors up to 15 years old | Optional; motors over 10 years old excluded |
Sum insured or total replacement
Almost all Australian building policies now use a sum insured: you nominate the maximum the insurer will pay to rebuild. Many add a safety net, often described as extended cover or a rebuilding buffer, that pays a set percentage above the sum insured if a total loss costs more than expected. The percentage and the conditions differ, and some policies only offer it as an option.
Total replacement cover, where the insurer pays whatever it costs to rebuild without a nominated cap, is offered by far fewer insurers. Where it is offered it usually depends on the insurer's own assessment of the home and may still cap certain costs. The Key Facts Sheet for every home building policy has to state which basis it uses, choosing from sum insured, sum insured plus a safety net, or total replacement, alongside an underinsurance warning. Moneysmart's guidance is to check this before comparing prices, because a cheap sum-insured policy with no buffer is not the same product as one with a generous buffer.
| Feature | Sum insured | Sum insured with a buffer | Total replacement |
|---|---|---|---|
| Most the insurer pays to rebuild | Your nominated amount | Nominated amount plus a set percentage | The actual rebuild cost, subject to conditions |
| Who carries the risk of a low estimate | You | Shared, up to the buffer | Mostly the insurer |
| How common in Australia | Standard | Common, sometimes optional | Offered by few insurers |
| What to check | The estimate itself | Buffer size and when it applies | Caps on specific costs and eligibility |
The rebuild costs people forget
A sum insured has to cover more than bricks and labour. Moneysmart lists the extras that push rebuild costs past a first estimate: demolition and site clean-up, asbestos removal, council fees, architect and surveyor fees, and the cost of meeting current building standards. After a regional disaster, when many homes need rebuilding at once, trade and material costs can rise further. Some of these are paid as additional benefits on top of the sum insured, but many policies cap them or count them within it, so check which.
- Demolition and removal of debris, including hazardous materials.
- Professional fees: architects, engineers, surveyors, certifiers.
- Upgrades to meet current codes, including bushfire construction standards (see the bushfire page).
- Temporary accommodation while the home is rebuilt, often capped by months or a percentage of the sum insured.
Legal liability
Building policies usually include cover for your legal liability as the owner of the property if someone is injured there or their property is damaged, for example a visitor who falls on a broken step. The NRMA and Suncorp home PDSs both set the limit at $20 million, including legal costs. If you only insure contents, you get liability cover as an occupier under that policy instead. Landlords need to check that liability cover continues when the home is tenanted, which is one reason landlord insurance for an investment property exists as a separate product.
Who needs building insurance
If you own a freestanding house or a townhouse on its own title, you are responsible for insuring the structure. If you have a mortgage, your lender will almost certainly require building insurance as a loan condition and may ask for a certificate of currency before settlement.
If you own a unit or apartment in a strata scheme, the owners corporation is generally required by state law to insure the building, and you insure only your contents and any fixtures the strata policy does not cover. Renters do not need building insurance at all.
Home warranty insurance is a different product. The builder arranges it for residential building work over a set value, and it protects the owner if the builder can't finish or fix the work; it doesn't insure the home itself. See home warranty insurance.
When a buyer has to insure
Insure from the moment the property becomes your risk, which can be well before settlement. In Queensland, the Queensland Government says that in most cases you become responsible for the property from 5pm on the next business day after the contract date, before settlement, and that your lender can insist that you take out home insurance.
In other states, when the risk passes depends on the contract and the state's conveyancing law, so ask your conveyancer or solicitor before you sign, and start the policy from that date rather than from settlement.
Buying a unit is different, because the owners corporation insures the building. Our guide to building insurance for a strata unit explains what the strata policy covers and what you still need to insure yourself.
What building insurance costs
The ACCC's June 2026 insurance monitoring report put the average building-only premium at $1,852 in 2024-25 across Australia: $2,884 in northern Australia and $1,773 elsewhere. Those are averages across very different homes, and your quote depends on the address, the rebuild cost and the cover you choose. Our home insurance guide has the averages by state and region and how they have moved.
General advice only. This information doesn't take into account your objectives, financial situation or needs. Consider whether the product is right for you and read the Product Disclosure Statement (PDS) and Target Market Determination (TMD) before you decide. We don't compare every product in the market, and we may earn a commission if you take up a product through our links.
What to watch for
- Market value is the wrong number. It includes the land and does not reflect rebuild costs.
- Renovations. A new kitchen, deck or extension raises the rebuild cost, so update the sum insured when the work finishes.
- Maintenance exclusions. Damage from wear and tear, rust, rot, termites or poor workmanship is excluded almost everywhere.
- The 72-hour rule. Some insurers, including Suncorp and Allianz, do not cover bushfire, storm or flood in the first 72 hours of a new policy unless you are replacing continuous cover or have just bought the home.
- Unoccupied property. NRMA's home PDS, for example, excludes some loss if the home is unoccupied for 60 or more consecutive days and not kept in a lived-in state, such as lawns mowed, mail stopped and weekly checks.
Common questions
What is the difference between home insurance and home building insurance?
They usually mean the same thing. Home building insurance, often shortened to home insurance, covers the structure. Contents insurance covers your belongings. Home and contents insurance is the two combined in one policy.
Is building insurance compulsory in Australia?
Not by law for a house owner, but lenders require it as a condition of a home loan. For strata properties, state laws generally require the owners corporation to insure the building.
Should I insure my house for its market value?
No. Insure it for what it would cost to rebuild, including demolition, professional fees and compliance with current standards. Market value includes the land, which does not need rebuilding.
How do I work out my rebuild cost?
Use a detailed building calculator, such as the one published by the Insurance Council of Australia or your insurer's, that asks about floor area, construction materials, slope and site access. Our rebuild-cost checklist lists what to have ready. For unusual homes, a quantity surveyor can give a professional estimate.
How much is building insurance per year?
The ACCC's June 2026 monitoring report put the average building-only premium at $1,852 in 2024-25: $2,884 in northern Australia and $1,773 elsewhere. Your own premium depends on the address, the rebuild cost, the construction and the cover you choose, so get quotes on your own rebuild figure.
Which company offers the best building insurance in Australia?
No insurer is best for every home. Compare Key Facts Sheets on the same sum insured and excess, check the buffer above the sum insured, flood cover and any 72-hour rule, then compare price. Many brands share an insurer: see who issues each brand.