Why you must have building insurance

Building insurance, also referred to as home insurance, insures the actual building that makes up your home, and covers damage to your home in some situations. Each provider’s policy will vary in what repairs or damage will be covered.

Contents insurance insures your belongings in your home. Most providers offer a combined building and contents package.

There are 3 types of insurance in this area:

• building (or home) insurance,
• contents insurance, and
• building (or home) and contents insurance combined.

Keystart does not provide home or contents insurance but there are a number of insurance providers in the market.

Compare different providers when looking for insurance. You might find it helpful to check the excess (the amount you need to cover if you are making a claim) and features. Many providers are now covering contents in transit, for example, a lost or stolen phone may be covered in your contents insurance. Packaging home and contents insurance will usually get you a discount too.

Just remember, if you are shopping around for home insurance or you're looking for a new insurance provider, be sure to keep your insurance cover going. You don't want to get caught out with no cover between policies. You can discuss this with your provider to ensure your insurance cover is seamless from one provider to the next.

Keystart recommends you obtain your own independent financial advice on what insurance and products are right for you.

How much insurance?

Building insurance coverage should be enough to cover the cost to clear the block, rebuild your home to the same standard and provide for temporary accommodation during this period if the worst-case scenario ever happened. 

A common misconception of home insurance is insuring the property for the total market value. However, land does not need to be insured. Even if a home burns down, the land is still there, only the building would be lost.

If you are not sure of how much to insure the property for, there are many tools and calculators online to assist you. You may find the Insurance Council of Australia's calculator useful. 

Example home insurance calculator

If you have a home loan with Keystart, it is a requirement that your property must be adequately covered with building insurance. This protects your home and offers some protection to Keystart too. Insurance is an ongoing condition of your loan with Keystart, meaning you need to ensure you always have a current building insurance policy in place, with Keystart noted as your lender. 

Keystart requires proof of building insurance only at the settlement stage. After this, keeping your insurance cover current is your responsibility. It's important to renew your home insurance every year so that you are sufficiently covered in the case that there is damage to your home.

If you have a shared ownership loan, the Housing Authority must be noted as a co-policyholder. If you have a strata-titled property, the building is likely to be insured as a whole.

Need some help choosing an insurer?

ASIC money smart website has a few tips on choosing a home insurance policy.

Got a question?

If you have any questions about Keystart's insurance requirement, you can give us a call on 1300 578 278 or contact us via our enquiry form.