For most people, their home loan is their single largest commitment, so it is important that you are well protected to cover the repayments. There are a number of products that can provide you with this protection. Below we have a look at some of the different types of insurance you may want to consider.
Home Building Insurance
Your lending institution will require you to have Home Building Insurance in place in order for them to settle on your home loan, so it’s a good idea to arrange this straight away.
Home Contents Insurance
Many people chose to combine their home and contents insurance as this often works out cheaper than having two separate policies. Choose between two types of policies: indemnity (where you are paid the depreciated value of your home and contents, based on the age and condition of item/s); and replacement/reinstatement, which pays out the full cost of rebuilding or replacing the item/s to an equivalent standard. There can be exclusions on such policies, so always read that boring fine print.
Landlord Protection Insurance
Covers some particular risks associated with renting out a property that may not be covered by a typical home and contents or strata titled policy eg loss of rent if Tenant defaults on rent payments.
Consumer Protection Insurance
Lets your mortgage repayments continue in the event of an accident or illness that puts your job and earning power on hold.
Income Protection Insurance
Provides a ‘monthly’ income if sickness or injury makes it impossible to work in your usual employment.
Lenders Mortgage Insurance (LMI)
This is insurance for the lender, not the borrower. It covers lenders for the difference if the lender has to repossess your property but fails to recoup the full amount of borrowings outstanding against the property once it’s resold.
Don’t Risk Under Insurance
A registered valuer can be contracted to value your home for insurance purposes. If you decide to do it yourself, add 10–20% to cover temporary accommodation, removal of debris, architect’s fees, and loss of rental for an investment property.
We are not insurance brokers and recommend you seek your own advice from your insurance company.