Is home insurance required?
Your home is likely the largest purchase you will ever make, so it is worth protecting. When you take out a home loan, your lender will require building insurance before settlement and will ask for proof of cover — generally for at least the amount they are lending toward the building component of the property. That is a condition of the loan, not a suggestion.
The detail that catches people out is the gap between what the lender requires and what it would actually cost to rebuild. A lender's interest is in recovering its security, so the required sum insured is framed around the loan, not around you. If you insure only to that figure and the worst happens — a fire, a flood, a severe storm — you can find the payout falls short of a full rebuild, and the shortfall lands on you.
What shapes your premium and your sum insured
Several factors move a home insurance premium, including the property's location, the age of the building, its construction materials, the rebuilding value and the size of the excess you choose. A higher excess generally lowers the premium but raises what you pay out of pocket at claim time — a trade worth setting deliberately rather than by default.
Most insurers offer an online home building calculator so you can estimate the sum insured needed to replace your entire home, not just the part the lender cares about. When you run those numbers, factor in the things that are easy to forget: fences, retaining walls, sheds, swimming pools, solar systems and any higher-cost building materials or fittings. Underinsurance is rarely a decision people make on purpose; it is usually the result of insuring to last year's figure while building costs moved on.
Building insurance covers the structure. It does not cover what is inside. Contents insurance — for furniture, appliances, clothing and personal belongings — is not required by your lender, but it is the cover that protects the things you would have to replace out of your own pocket after a loss.
Where this sits in a property plan
Insurance is a structural part of holding property, not an afterthought to clear at settlement. The cover you put in place protects the asset the rest of your plan is built on. The specific policy, sum insured and inclusions that suit your situation are matters for a licensed insurance adviser — choosing and pricing a product is financial advice, and that is their domain, not ours. What we can do is make sure the lender's insurance conditions are understood early and met cleanly, so a cover requirement does not stall your settlement.
If you are working through a purchase and want the lender's conditions mapped before they become a deadline, book a strategy session and we will work through where you stand.
General information only — not personal financial product or credit advice. Insurance product suitability should be confirmed with your licensed insurance adviser. AeFin is an Australian Credit Representative (CR 464548) of Finsure (ACL 384704).