Home Insurance Basics: What It Covers and What It Does Not
Understand the difference between buildings and contents insurance, common exclusions, excesses and how to choose cover without paying for gaps.
Home insurance usually comes in two parts: buildings cover for the structure and contents cover for your belongings. It protects against sudden events such as fire, theft or burst pipes, but not against wear and tear or damage caused by poor maintenance.
Buildings vs contents cover
Buildings insurance pays to repair or rebuild the physical structure of your home. That typically includes walls, roof, floors, permanent fixtures such as fitted kitchens and bathrooms, and sometimes garages, fences and driveways.
Contents insurance covers your possessions: furniture, electronics, clothing, appliances and other items you would take with you if you moved.
Homeowners often buy both, sometimes as a combined policy. Renters usually only need contents cover, since the owner insures the building. If you have a mortgage, your loan agreement may require buildings cover.
What is usually covered
Most policies cover sudden and unexpected events. The exact list varies, so read your policy wording.
- Fire, smoke and explosion
- Storm damage
- Escape of water, such as burst pipes
- Theft and attempted break-ins
- Vandalism
- Falling objects, such as trees
- Subsidence or ground movement, in some policies
Many policies also include temporary accommodation if your home becomes unliveable after an insured event, and liability cover if someone is injured at your property.
What is usually not covered
Exclusions are where most claim disputes arise. Insurers generally do not pay for damage that builds up slowly or results from a lack of care.
| Commonly excluded | Why |
|---|---|
| Wear and tear | Expected ageing, not a sudden event |
| Gradual leaks and damp | Damage over time, not sudden |
| Poor maintenance | Owner's responsibility to maintain |
| Pests and vermin | Usually treated as maintenance |
| Accidental damage | Often only available as an add-on |
| Items away from home | Often needs extra portable cover |
| Unoccupied home for long periods | Many policies limit cover after a set number of days |
| High-value items above a limit | Must often be listed separately |
Some events, such as flood or earthquake, are covered in some places and excluded or sold separately in others. Check with the insurer if you live in an area with these risks.
How much cover you need
For buildings, the sum insured should reflect the cost of rebuilding your home, not its market value. Rebuilding cost includes labour, materials, demolition and professional fees. It can be higher or lower than what the house would sell for.
For contents, go room by room and estimate what it would cost to replace everything new. People often underestimate this. If your cover is too low, some insurers reduce a claim payout in proportion, even for a small loss.
Keep receipts, photos or a video of your belongings. This makes claims faster and helps prove ownership.
Store these records somewhere other than your home, such as a secure cloud folder or with a trusted relative. If a fire or flood damages the house, paper records kept inside may be lost along with everything else. Update the list whenever you buy something valuable.
Reading the policy and choosing a quote
Compare policies on what they cover, not just the price. A cheaper policy may have a higher excess, lower limits or more exclusions.
Before buying, check:
- The excess for each type of claim
- Limits for single items and valuables
- Whether cover is "new for old" or deducts for wear
- Rules on leaving your home empty
- Security requirements, such as approved locks
- How to make a claim and the time limits for reporting
Review your cover at each renewal rather than letting it roll over automatically. Renewal prices can rise even when nothing has changed, and your needs may have shifted after renovations, new purchases or a change in who lives with you. Compare a few quotes each year and tell your insurer about any changes that could affect cover, such as building work, a home business or long periods away.
Answer every application question honestly. Giving wrong information, even by mistake, can lead to a claim being refused or the policy being cancelled.
Making a claim
Report damage as soon as you can, and take reasonable steps to prevent further loss, such as turning off the water. Take photos before cleaning up, and keep damaged items until the insurer says you can dispose of them.
If a claim is refused and you disagree, ask for the reasons in writing and use the insurer's complaints process. Many countries have an insurance ombudsman or regulator that handles unresolved disputes, so check what applies where you live.
The bottom line
Home insurance protects against sudden events, not gradual wear or neglect. Choose buildings cover based on rebuild cost, value your contents carefully, and read the exclusions and excess before buying. Keep records of your belongings and your home in good repair, and you will be in a stronger position if you ever need to claim.
Frequently asked questions
Do renters need home insurance?
Renters usually do not need buildings insurance, as the owner typically arranges it. Contents insurance is still worth considering to protect your own belongings, and some leases require it.
What is an excess or deductible?
It is the amount you pay towards each claim before the insurer pays the rest. A higher excess usually lowers your premium but means you pay more when you claim.
Is flood damage covered by standard home insurance?
It depends on the policy and where you live. Some policies include flood, some exclude it and some areas need separate cover, so check the wording and ask the insurer directly.
Will making a claim raise my premium?
It can. Insurers often consider your claims history when setting prices, so some people pay small repairs themselves. Weigh the repair cost against your excess and any likely price increase.
Disclaimer: This guide is general information only and may not fit your situation or country. Rules, prices and requirements change, so check the details with the official source or a qualified professional before you act. Read our full disclaimer.
