Learn about Building Insurance

Would you like to better understand building insurance? The article below provides information about what it is and what it covers.

What is building insurance?

Building insurance covers the cost of rebuilding or repairing damage to the structure of your property. It is normally compulsory if you are planning to buy your home with a mortgage. It normally covers damage caused by:

  • Natural disasters
  • Theft and vandalism
  • Sudden escape of liquids from burst pipes
  • Fallen trees, lampposts, aerials or satellite dishes
  • Vehicle or aircraft collisions

What does building insurance cover?

Building insurance covers any damage to the physical structure of a property in the event of a sudden, uncontrollable event, including extreme weather, natural disasters or theft. The physical structure of the property includes the roof, floors, walls, fences and garages.

Do I need building insurance?

If you own a home, building insurance will help cover you if your home is destroyed or damaged as the costs involved to repair it could be large. It’s normally a condition to have building insurance if you have a mortgage. If you rent however, it is up to the landlord to have building insurance, not the tenants.

Do tenants need building insurance?

It’s the landlord’s responsibility to have building insurance, not the tenants. The tenants are only responsible for contents insurance to cover the damage to any of their possessions within the home.

Do you need building insurance on exchange of contracts?

Whether or not you need building insurance on exchange of contracts will depend on what state you live in. For example, in NSW, vendor carries risk of loss or damage to property until settlement but in SA, risk falls on purchase from date of exchange. This is because between exchange and completion, there could be a risk of fire or other catastrophe, which you will need to consider.

Does building insurance cover water damage?

Building insurance policies cover water damage from burst pipes that are sudden and accidental. It does not cover leaks that have trickled out water over months or years. It is your job as the homeowner to ensure your home doesn’t undertake deterioration.

Is it mandatory to have building insurance?

If you own a home, you will need building insurance in case your home is destroyed or damaged as the cost to repair is extremely large. It’s normally a condition to have building insurance if you have a mortgage. If you rent however, it is up to the landlord to have building insurance, not the tenants.

Is structural damage covered by building insurance?

Structural damage is generally not covered by building insurance. This is because insurance is generally designed to cover loss due to sudden, accidental events. Often, hidden structural damage isn’t discovered until months or even years after the initial problem started.


Any advice is general only and does not take into consideration your personal circumstances. Before acting on any information contained in this article you should consider if the advice is appropriate for your personal objectives, financial situation and needs.