Your home building sum insured should generally reflect an appropriate rebuilding or replacement cost, rather than the property’s market value or purchase price.

The rebuilding estimate should allow for the property and the costs that can arise when reconstructing it after a major insured loss.

Why is market value different? #

The market value of a home includes factors such as:

• Land value.
• Location.
• Local property demand.
• Development potential.

These do not necessarily reflect what it would cost to rebuild the house.

What rebuilding costs should be considered? #

Depending on the property:

• Demolition.
• Debris removal.
• Building materials.
• Labour.
• Professional fees.
• Council or authority requirements.
• Construction cost increases.
• Rebuilding access.

What about renovations? #

The building sum insured should be reviewed after significant works such as:

• Extensions.
• New rooms.
• Major kitchen renovations.
• Structural improvements.
• New garages or outbuildings.

Should I review the value every year? #

Yes.

Construction costs change over time.

The sum insured shown on the renewal should be checked rather than assuming an automatic increase will always produce the correct rebuilding value.

What happens if I insure the home for too little? #

There may not be enough insurance available to fully rebuild after a major loss.

Some policies also contain provisions dealing with inadequate sums insured.

Webber Insurance can assist with access to a rebuilding cost calculator and help review the resulting estimate against the information available about the property.