How much should you insure your house for?
When you take out home insurance, you can opt to choose a sum insured. While getting it right to the last dollar is almost impossible, having a reasonable estimate is important. If it’s too low, you may be underinsured and if it’s too high you may be paying more premium than you need to.
Know that in addition to the sum insured, there are fixed limits applicable to certain items covered under AAMI’s policies. For example, we will only cover loss or damage to fencing up to two kilometres in length, for any one incident. There are also fixed limits and flexible limits applicable to certain contents items. You can read the full details in the Product Disclosure Statements.
Luckily, AAMI has a couple of calculators that may help!
Home and Contents Insurance Calculator
A way to estimate your home building cover
Elemental estimating
The elemental approach involves a detailed assessment, and can provide an estimate for your sum insured.
Considerations include:
- the size of individual rooms
- construction quality
- features like solar power and air conditioning, and
- other factors.
Our easy-to-use online home insurance calculators can guide you through an elemental assessment. Know that this calculator is simply a tool to produce an estimate, it cannot be guaranteed to produce an accurate result.
Remember, the calculator won’t take into account all potential rebuilding costs. Other costs to consider may include debris removal and architecture services that surpass the 10% amount of your sum insured coverage.
Home and Contents Insurance Calculator
Why rebuilding costs vary
Building codes are regularly updated to ensure new homes are built to the latest safety standards. If they’ve been updated since the time your home was built, your original building cost or estimate may be impacted. Other impacts on your building costs could include:
- building permits and council fees
- removal of debris or hazardous materials, and
- inflation on building materials, fittings and labour.
Check the current or proposed sum insured on your policy to ensure it is adequate, or chat with a professional if you’re unsure.
How to estimate your home contents cover
Our Home Contents Insurance policy cover contents at the insured address. Whether you’re a homeowner or renter, contents cover can help you get back on your feet quickly if something unexpected – like a fire or break-in – happens within your home.
When estimating the contents cover you need, make an inventory of your belongings. Your contents can include:
- furnishings
- white goods
- clothing
- electronics, and
- jewellery (flexible limits can apply).
Although some contents items have a fixed limit, you may be able to cover others with a flexible limit. This means you can ask us to increase their cover, for an extra premium, as a specified item. Items that can have flexible limits include jewellery and art collections, memorabilia, and more. See the Product Disclosure Statement for more details on which items can be covered with flexible limits.
Alternatively, fixed limits apply to items like tools of trade, equipment used for business activity, refrigerated food, frozen food, medicines, and contents in the open air. As always, check the Product Disclosure Statement for all details, limits, and exclusions.
Make your contents inventory as detailed as possible, with copies of receipts, serial numbers and photographs where possible.
You may also choose to combine your home contents policy with your home insurance policy. Explore our interactive home and contents insurance guide to find out more.
Need help? Try an online contents calculator to help estimate your contents sum insured.
Learn more about Home and Contents Insurance
How to avoid underinsurance
We all want our home and belongings protected against life’s surprises.
But what if there is an insured event and the amount listed on your certificate of insurance isn’t enough to rebuild your home or replace your contents?
This is known as underinsurance.
Underinsurance can happen for many reasons:
If your home or contents are not valued according to their repair, rebuild or replacement costs when purchasing or updating your policy.
If you renovate your home but don’t adjust the building value on your policy – also known as the sum insured.
If you purchase new items, like appliances or furniture, but don’t adjust the value of your contents on your policy.
With the cost of living rising, it may be tempting to have a lower sum insured to save money on your insurance premium.
But if you need to claim, your insurance policy might only cover a portion of the repair, rebuild or replacement costs, leaving you to pay the rest.
When it comes to choosing a set sum insured for your policy, there are a few simple steps you can take to help avoid being underinsured.
Use the AAMI Home Building and Contents calculator to get an estimated rebuild cost for your home and estimated total replacement costs for your contents.
A qualified builder can also provide further help with estimating rebuild costs according to current building standards.
Make a list of your belongings to ensure your contents sum insured is accurate. For particularly valuable items, take a photo, note their value, and save any receipts.
Keep this list up to date by adding any new items you purchase for your home.
No two home insurance policies are the same, which means it’s important to read your policy documents.
Knowing what your policy does and does not cover, and any limits that apply, will help give you confidence that you’re covered if you ever need to claim.
With AAMI, you can also choose our optional Complete Replacement Cover for the home building.
Complete Replacement Cover is our best protection against underinsurance as we’ll repair or rebuild your home as it was or pay you the amount of the assessed quote to repair or rebuild it, without you needing to set a sum insured.
And remember, don’t set and forget. As your life circumstances change, so should your home and contents insurance policy.
Regularly review your policy details to ensure your cover is up to date and meets your needs.
Download the AAMI App or log in online to update your policy.
And for other helpful tips, visit the AAMI Informed site.
Underinsurance is when your sum insured isn’t enough to cover all costs incurred after an incident. It can happen for many reasons, such as failing to increase your sum insured after a home renovation or an upgrade that adds to rebuilding costs.
Unsure about the amount of cover you need, or concerned that your changing circumstances may leave you underinsured? You may consider choosing a policy that offers Complete Replacement Cover (at an additional premium). This means that, in the event of a claim, we will offer to repair or rebuild your home, or pay the amount of the assessed quote to repair or rebuild.
If you’re an existing AAMI customer, you can add Complete Replacement Cover as an optional cover to your policy when it is up for renewal by calling us on 13 22 44 or by logging into your account.
Read more:
- How to make a home insurance claim
- A guide to handling home burglaries
- What is Complete Replacement Cover?
Insurance is issued by AAI Limited ABN 48 005 297 807 AFSL 230859 trading as AAMI. Any advice has been prepared without taking into account your particular objectives, financial situation or needs, so you should consider whether it is appropriate for you before acting on it. Please read the relevant Product Disclosure Statement before you make any decision regarding this product. The Target Market Determination is also available.
The information is intended to be of general nature only. Subject to any rights you may have under any law (including the Australian Consumer Law), we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon the information. Please make your own enquiries.