Understanding house sum insured

Don’t get caught short. Work out how much it could cost to fully rebuild your house in case of total loss, so you can make sure you’ve got the right amount of insurance.

Why you need to calculate your sum insured

When you take out a House Insurance policy you're responsible for confirming the amount it would cost to fully rebuild your house and to keep this figure up-to-date.

If your house is destroyed by events such as storm, flood, earthquakes, natural landslips or volcanic eruptions it may be rebuilt up to your sum insured.

If your house is destroyed by a fire (except fire following a natural disaster) you may be covered for up to 20% more than of your sum insured.

In the case of a natural disaster your house is covered for replacement, up to your sum insured, and includes the portion of your loss covered by EQCover.

Calculating your sum insured

Your sum insured isn't the same as the market value of your house. It’s the likely cost of rebuilding your home on its current site, based on:

Your current house

  • size
  • standard and type of construction
  • structures, like decks, driveways, sheds, garages, retaining walls, fencing and outbuildings
  • permanent swimming and spa pools
  • special features such as jetties and cable cars

The cost to rebuild

  • building material and labour costs
  • demolition and removal of debris
  • site preparation
  • professional fees
  • compliance costs

There are a number of ways you can calculate your sum insured - it's up to you. You can use the independent online Cordell Sum Sure calculator, or ask a licensed builder, quantity surveyor, architect or a registered valuer to help.

Shared ownership

If you share a driveway or fences with your neighbours, you're responsible for insuring your portion of these.

If you live somewhere governed by a body corporate, like an apartment complex, the body corporate usually has one insurance policy covering all the units in the complex, and all the common property. This may already be insured on a sum insured basis – you can find out from your body corporate secretary or committee.

You’ll need to understand the extent of your liability and allow for it in your sum insured.

Cordell Sum Sure calculator

The Cordell Sum Sure calculator is an independent tool that generates an estimate of your likely rebuild cost based on the information you provide about your house. It may not be as accurate as a valuation by a professional. It's an estimate and isn't intended to replace a professional valuation of improvement replacement costs.

To use the calculator, enter your address and check the property details.

While the calculator can be useful it does have limitations. The estimated rebuild cost is generated without a physical inspection of your property. The data used may not take into account all relevant information. In addition, it may not be accurate for very large or high value homes, such as those that cost over $2 million to rebuild, nor does it factor in many special features including:

  • areas of shared ownership, such as driveways and fencing that you co–own with neighbours
  • hard to access sections
  • houses with multiple construction materials (e.g. brick and weatherboard)
  • houses with mixed commercial and residential use
  • local laws and planning requirements.

Therefore, you might want to consider getting a professional valuation to ensure you’re adequately covered. If you don’t, you should consider adding an additional amount to your estimated sum insured to take any of the above limitations into account.

Remember to save a copy of your results for your own records.

Please see important information about the Cordell Sum Sure calculator.

Keeping your sum insured up to date

Once you’ve set your sum insured, it’ll be adjusted each year as part of the annual review of your policy.

The new sum insured amount will be included in your updated documents, which will be sent to you a few weeks before your policy is updated. You need to review the sum insured each year to make sure it’s still appropriate for your home. The Cordell Sum Sure calculator can help you with this.

You may also be interested in