Looking to buy your first home and in the market for a house, apartment, unit or townhouse? If you are a first home buyer, understanding how home insurance can protect you and your investment is extremely important.
Upon purchasing your first property, you are participating in an important part of the economy, particularly if the property is a newly constructed one. While there has been a drop in recent times of first home buyers committing to finance, there were still 90,000 new first home commitments in the 2010/2011 calendar yeari.
Looking at 2009-10 data, on average, first home buyers paid $401,000 for their properties: significantly less than the amount spent by those buying subsequent properties. Further, the data has revealed that 26% of first home buyers with a mortgage have purchased homes in medium-density or high-density housing - 5% higher than the national average. When compared to other home buyers, first home buyers also had, in general, a higher than average household income. Equity in the home was the main household wealth for them, however the average equity of $120,000 was less than half of the average amount of principal owed ($282,000)i.
A home is a valuable investment. And when you do make the commitment to purchase your first home, it is important to consider taking out home insurance to protect your investment.
Home insurance building cover provides you with protection in case your building is damaged or destroyed by one or more of the insured events, including fire or smoke, rainwater or runoff. This includes covering items like pipes, cables and switches as well as permanently connected fixed appliances such as air conditioners, hot water systems, stoves and light fittings. It even covers fences, gates and fixed clothes lines.
Home contents insurance protects the possessions you keep inside your home such as computers, furniture, clothes, washing machines and dryers. It also includes items like carpet, rugs and curtains.
By taking out home and contents insurance, you can protect the investment in your property and belongings. Indeed, it may be a requirement of your mortgage that you have home insurance.
Before you take final possession of your property is a good time to plan and organise your insurance. When you're selecting your insurance provider, it's worth considering the features each provider offers as well as the price. For example, Allianz has new environmental benefits at no extra cost as well as additional cover options like personal effects cover.
If you'd like to do some homework on how much your building and contents should be insured for, Allianz also offers two home insurance calculators: a Home Insurance Building Calculator and a Home Insurance Contents Calculator. These can give you a general guide to the value of your building and possessions.
For more information, see our home insurance page or get a quote online to start on the path to protecting your new home today.
i ABS, 2011, Housing Occupancy and Costs: 2009-10, http://www.abs.gov.au/ausstats/abs@.nsf/featurearticlesbytitle/6B12D0A255A76E8ECA257665001EA4D8?OpenDocument