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Six questions · Question 05

What the cover leaves out

Termites and home insurance

The standard cover that federal regulations set for home buildings insurance excludes damage from “the action of insects or vermin”, so a policy does not have to cover termite damage to meet that standard; whether yours does is in its own terms. In Queensland, the home warranty scheme for building work does not cover defects caused by an owner’s failure to undertake maintenance, inspections and treatment of the property.

General information, not financial advice, and not a view on any insurer or policy. The official places to check are Moneysmart and QBCC, listed at the foot of this page.

What “standard cover” means

Home buildings insurance is one of the kinds of insurance the Insurance Contracts Act 1984 gives a standard cover. For a listed event, an insurer cannot refuse to pay the minimum amount just because its policy leaves the event out, unless before the contract it clearly told the insured in writing, or the insured knew or could reasonably be expected to know, that the policy would not cover it.

The listed events for a home building are in section 19 of the Insurance Contracts Regulations 2017. They include fire, lightning, earthquake, theft, burst or leaking fixed pipes, storm, flood and impact by a falling tree. Section 19 then excludes some things from them:

“(2) The following are excluded: (a) depreciation; (b) wear and tear, rust or corrosion; (c) the action of insects or vermin; …”

Insurance Contracts Regulations 2017, section 19, compilation registered 10 March 2021

Put plainly: the standard cover the law sets for home buildings does not include termite damage. A policy can still offer more than the standard cover, which is why the policy’s own wording is the thing to read.

Home warranty is a different thing

The Queensland Home Warranty Scheme, run by QBCC, covers defects in residential construction work by a licensed contractor. Its product disclosure lists defects it does not cover, and three of them bear on termites.

Not covered

  • Defects “caused by deterioration through fair wear and tear, lack of maintenance or neglect by you”.
  • Defects caused by your failure “(or the failure of another person who is not the licensed contractor who carried out the work or a person engaged by the licensed contractor) to undertake maintenance, inspections and treatment of the property”.
  • Defects covered by another policy of insurance.

Time limits, as at October 2026

Structural defects are covered if you first become aware of them within 6 years 6 months after the cover starts, and you must claim within 3 months of first becoming aware. QBCC also notes that the Queensland Government has said since 2017 it will review the scheme, so check QBCC’s time limits page before relying on these.

QBCC’s termite booklet ties the two together: owners must make sure they do not disturb or breach termite management systems, to keep their warranties and insurance entitlements. Its example is a water tank installed against a perimeter wall, which may breach the inspection zone, let termites in unseen, and void warranty and insurance entitlements. Question 03 sets out the inspections and upkeep QBCC recommends.

Reading your own policy for termites

Moneysmart’s guidance on choosing home insurance applies directly. The questions below are its own, pointed at termites.

  • Read the exclusions. Finding out what the policy leaves out may mean reading its product disclosure statement (PDS).
  • Use the Key Fact Sheet. Insurers must provide one for their policies, set out in a layout the government sets, which makes policies easier to compare.
  • Check caps, limits and special conditions, as well as excluded events, items and types of damage.
  • At renewal, check whether any exclusions or limits have changed.
  • In a strata-titled unit, check with the body corporate: it may be responsible for insuring the building.

One distinction is worth knowing. A burst or leaking fixed pipe is a listed event in the standard cover while the action of insects is not; how a policy treats a loss with more than one cause is a question for its wording and for the insurer.

If a claim is refused

  1. In writing

    If your claim is denied, Moneysmart says the insurer must give you, in writing, what part of the claim it did not accept, the reasons, your right to ask for copies of reports it relied on, and how you can complain. If you ask for those reports, they must be sent within 10 business days.

  2. Internal complaint

    A formal complaint to the business in writing is called internal dispute resolution.

  3. External complaint

    The Australian Financial Complaints Authority (AFCA) considers complaints about insurance, among other financial services, and hears complaints for free.