What does building insurance cover?
Building insurance covers the physical structure of your home and its permanent fixtures against insured events like fire, storm and impact. If you have a mortgage, your lender will almost always require it.
The key is insuring for the cost to rebuild — not the market value — which is where many homeowners get caught out.
Typically covered
- •The home’s structure — walls, roof, floors and permanent fixtures
- •Fixed items like built-in wardrobes, kitchens and bathrooms
- •Outbuildings, fences, driveways and sometimes pools (with limits)
- •Rebuild and associated costs after an insured event (e.g. demolition, debris removal)
Typically not covered
- •Your belongings (that’s contents insurance)
- •Wear and tear, gradual deterioration, or poor maintenance
- •Structural defects or faulty workmanship
- •Damage from pests such as termites
How it works in Australia
Building cover is based on rebuild cost, not market or sale value — rebuilding can cost more or less than what the property would sell for. Rising construction and labour costs mean it’s worth reviewing your sum insured regularly so you’re not under-insured.
Renting the property out? A landlord needs this building cover plus landlord-specific protection — loss of rent, liability and optional tenant-default cover. See landlord insurance →
General information only — cover, limits and exclusions vary by insurer. Always read the Product Disclosure Statement (PDS) before deciding.
Frequently asked
Is building insurance mandatory?+
Not by law, but mortgage lenders almost always require it as a loan condition. For owner-occupiers it’s strongly recommended regardless.
Should I insure for market value or rebuild cost?+
Rebuild cost — the amount to rebuild your home as new, including demolition and fees. Market value (which includes land) isn’t the right basis and can leave you over- or under-insured.