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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 not the choice of insurer but the amount insured. 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.
By Better Rate Mate Editorial Team · Last reviewed
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.
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 |
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.
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 exists as a separate product.
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.
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.
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.
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.
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. For unusual homes, a quantity surveyor can give a professional estimate.
