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Total Replacement Home Insurance

Total replacement home insurance covers the market cost to rebuild. It's only offered by AAMI, but a comparable alternative exists in the form of "sum insured" cover.

Name Product Fire, Storm & Theft Damage Rebuilding & Repairs to your Home Accidental Damage to Home or Belongings Sum Insured Safeguard Full Building Replacement
Budget Direct Home & Contents Insurance
BonusFinder Award Finalist
Budget Direct Home & Contents Insurance
Our verdict: The most popular insurer on Finder, Budget Direct prioritises low-cost cover and gives you up to 30% off your first year for new combined policies purchased online. This is a big reason it won this year’s Finder Award for value.
Youi Building and Contents Insurance
Our verdict: Finder’s 2022 Insurer of the Year for Customer Satisfaction and our Top Pick for Fire Damage cover. It’s good if you want a tailored quote over the phone.
QBE Home & Contents Insurance
Our verdict: Finder's Top Pick for Floods plus cover for other common claims such as fire and theft). Its discount is better than most – 20% off your first year with a combined policy.
Honey Home & Contents Insurance
Our verdict: Honey gives you $250 smart sensors to reduce accidents and estimates your rebuild costs for you. Honey was a finalist for the comprehensive category in this year’s Finder Awards.
Australia Post Home & Contents Insurance
Our verdict: Covers common claims such as fire, storms, floods and rain. It’s also very helpful if you need to rebuild following a disaster. It offers a special safeguard of up to 30%.
Kogan Home & Contents Insurance
Our verdict: Good comprehensive cover (issued by QBE). Also, get 16% off on your first year's premium when you purchase a new combined Home & Contents insurance policy online + $10 monthly credit. T&Cs apply.
Qantas Home and Contents Insurance
BonusFinder Award Finalist
Qantas Home and Contents Insurance
Our verdict: Earn up to 30,000 Qantas Points with every Qantas Home Insurance policy you take out by 28 May. T&Cs and exclusions apply.

How does total replacement home insurance work?

Total replacement home insurance (sometimes called complete replacement home insurance) works like this: if an insured event like a fire or storm destroys your home, it can cover the cost of rebuilding your property to its previous state.

Most home insurance policies don't do this; with most, you select how much you want to insure your property for (sum insured).

Total replacement cover home insurance policies reduce the gap between the amount your home is insured for and what it actually costs to rebuild the home to its original condition. As a result, they tend to cost more.

The often cheaper alternative is a sum insured safeguard. This is a "safety net" that can provide up to an additional 30% of cover on top of your sum insured if your home is destroyed.

Total replacement cover vs sum insured cover

There are two main types of home insurance available:

  • Total replacement insurance covers the market value of rebuilding your home, so you're unlikely to have any out of pocket expenses.
  • Sum insured cover makes it your responsibility to decide how much your home will cost to rebuild. For example, if you insure your home for $1,000,000 but it ends up costing $1,200,000 to rebuild, you'll be $200,000 out of pocket.
Total replacement coverSum insured cover
You don’t set a cover limit.You set a cover limit.
The insurer pays the total cost of rebuilding your home.The insurer pays up to your limit if your home is damaged by an insured event.
It's worth considering if you don’t know how much it will cost to rebuild your home.It's worth considering if you know how much it will cost to rebuild your home.
The best protection against underinsurance.Has a higher risk of underinsurance.

How to calculate the replacement cost of your home

According to the Insurance Council of Australia, 83% of Australian homeowners and renters are underinsured. To make sure you have the right amount of home insurance, there are two main methods for working out the cost:

  • Cost per square metre. This is a basic method and is based on the size of the house and the materials it's made of, so it can't be relied upon to provide an accurate figure.
  • Elemental estimating. This is a much more sophisticated method that takes into account a range of factors, including local wage rates, material costs, the quality of the finishes used, the nature of the building site, how many levels the home has, council approval fees and more.

Angelo Azar: Tips to calculate your sum insured

Angelo Azar

"It's important to factor in expenses such as demolition of your damaged home, removal of the debris that is leftover and also, planning for the new home. These are considerable factors that can add significant costs to the overall rebuild costs, particularly where a policy sum insured doesn't factor in any additional costs for these expenses."

Angelo Azar is the Chief Operating Officer at Honey Insurance.

Online calculators tip
Try to look for an online calculator that takes into account current building and replacement costs to help you reach a more accurate sum insured. This calculator from the Insurance Council of Australia is a great place to start.

Is total replacement home insurance right for me?


  • It greatly reduces the risk of underinsurance.
  • Peace of mind of knowing that you'll be able to afford the rebuilding costs if disaster strikes.
  • You don't need to rely on your own (perhaps limited) knowledge of how much to cover your home for.


  • Total replacement cover is usually more expensive than sum insured cover.
  • It can take longer to receive the funds as the insurer will need to complete an assessment.
  • Many sum insured policies also offer a "safety net" that can provide up to 30% additional cover which may be enough.

Bottom line about total replacement cover

Regardless of whether you choose total replacement or sum insured home insurance, it’s essential that you shop around before you commit to any one policy. By comparing the features and costs of a range of policies, you’ll find the best value for money for your individual circumstances.

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