Underinsurance is a big problem in Australia and millions of households are at risk of being left out of pocket or unable to rebuild if they ever lost their home.
In fact, an Insurance Council of Australia study found that 83% of households believe they may not have adequate home or contents insurance. Another survey by MCG Quantity Surveyors found large numbers of Aussie homes could be underinsured by up to 66%.
Of course, there are ways to reduce the risk of underinsurance, such as home insurance calculators. They're one of the first steps taken when securing home insurance, and they give us a clearer picture about what full-rebuild costs might actually be.
However, home insurance calculators aren't perfect. Finder entered the details of a three-bedroom house in Sydney into eight different home insurance calculators to find out what it would cost for a complete rebuild. There was a difference of $63,036 between the highest and lowest rebuild quotes.
| Calculator | Home-rebuild quote | Cost breakdown |
|---|---|---|
 | $298,157 | Rebuild cost - $224,372 Professional fees - $9,145 Demolition - $37,534 GST - $27,106 |
 | $256,869 | Rebuild cost - $224,372 Professional fees - $9,145 GST $23,352 |
 | $283,331 | Rebuild cost - $210,896 Professional fees - $9,144 Demolition - $37,534 GST $25,757 |
 | $283,057 | Rebuild Cost $257,324 GST $25,733 |
 | $235,121 | Building Cost $213,746 GST $21,375 |
 | $285,547 | Building cost - $212,911 Professional fees - $9,144 Demolition - $37,533 GST $25,959 |
 | $298,157 | Rebuild cost - $224,372 Professional fees - $9,145 Demolition - $37,534 GST $27,106 |
 | $238,701 | Building cost - $217,001 GST $21,700 |
There were also discrepancies with contents calculators. We entered the same information into 9 different calculators and found a difference of $8,174 between the highest and lowest quote.
While it's less severe than the rebuild discrepancies, it's still a large chunk of money and could leave you seriously out of pocket if you had to replace all of your belongings.
| Calculator | Quote |
|---|---|
| $59,666 |
| $65,585 |
 | $60,669 |
| $64,136 |
| $59,666 |
| $57,411 |
| $58,800 |
| $59,666 |
| $64,136 |
Nobody wants to lodge a claim only to find out they don't have enough insurance to cover their costs, especially if they come up short by tens of thousands of dollars. On the other hand, nobody wants to be paying too much for their home insurance. So what's the solution?
While home insurance calculators are problematic, there are ways to make sure you're getting the most value out of a home insurance calculator.
Know the details of your home
You'll be asked heaps of questions when filling in a home insurance calculator. Is your home built on a slope? Are building materials scarce in your local area? What materials are used in the construction of your home?
Don't guess. If you're not 100% sure about the answers, type your address into Google to find a property report. If there is still information missing, check public records. One wrong guess could skew the quote by tens of thousands of dollars.
Use a thorough calculator
Some calculators won't ask how close you are to bushland, how many stories your home is, or even what the specific address is. It's worth trying a few calculators but pay particular attention to the ones that are thorough in their questionnaire.
Check the breakdown costs
Check whether professional fees and demolition costs are included in the quote. These can add tens of thousands of dollars on top of the initial estimation if they're not already included.
Home insurance calculators are an important tool in preventing underinsurance, but they're not the only one in the box.
Lots of insurers offer a sum insured safeguard, which promises to increase your sum insured amount if it turns out the initial valuation was incorrect. Usually, they'll increase your sum insured by a certain percentage, such as 25%. A sum insured safeguard may come as standard, may cost a little more or it may not be offered at all – it all depends on the insurer.
Full-building replacement is a less common but more comprehensive version of sum insured safeguard. It promises to pay the full cost of replacing your home if it's a total loss, even if it is significantly more than the home was initially insured for.
Having your home professionally valued on a regular basis is an effective way to minimise your risk of underinsurance. Getting a builder or quantity surveyor to give you a quote for the potential full-replacement cost will give you extra peace of mind that you're adequately covered.
Check the table below to see which insurers on our panel offer a sum insured safeguard or full-building replacement, so you know you have some protection against under insurance.
| Brand | Benefit | Potential sum insured increase | Policy wording | Apply |
|---|---|---|---|---|
 | Sum Insured Safeguard | Up to 25% | The Sum Insured Safeguard cover means we will increase your sum insured that is stated on your Insurance Certificate by up to an additional 25% | |
 | Sum Insured Safeguard | Up to 25% | The Sum Insured Safeguard cover means we will increase your sum insured that is stated on your Insurance Certificate by up to an additional 25% | |
 | Sum insured safety net | Up to 30% | If the cost to repair or replace your building is more than your sum insured, we will pay the extra cost to: • repair the damage, or • replace your building. The sum insured safety net does not increase your sum insured or any other additional benefit | |
 | Sum insured safety net | Up to 30% | If the cost to repair or replace your building is more than your sum insured, we will pay the extra cost to: • repair the damage, or • replace your building. The sum insured safety net does not increase your sum insured or any other additional benefit | |
 | Full building replacement | Total value | This is the total amount payable to rebuild your buildings at the insured site to the same size and standard as you current buildings in the event that a total loss occurs as a result of an insured event |
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