Estimating rebuilding costs
If you build it, the bills will come
When working out how much home building insurance you need, the
most important factor is estimating what it would cost to rebuild
your home. This is a very complex task. You may need some help.
Pros and cons of web
Many insurers have online calculators on their websites to help
you work out the 'sum insured' (the amount of cover you need in
dollars) for your home.
These calculators can be useful for working out how much cover
you need, but not all calculators are the same. They use two
different methods to estimate rebuilding costs:
- Cost per square metre - this
method provides a rough guide that should not be relied
on and is based on the size of the house and the materials
- Elemental estimating - assesses in detail
the different elements of the building to calculate rebuilding
costs from the ground up, using local wage and material rates and
other construction data
Cost per square metre calculators will ask you less than 10
questions and may not take into account all the features of your
home. They are likely to give you an average figure that could be
too high or too low.
The more basic calculators are limited because they apply an
average figure to each house. They don't take into account features
that can increase rebuilding costs, such as whether your home is
built on a slope, has higher quality finishings or is more than 40
The results can vary greatly from calculator to calculator. So
it pays to be aware that there are differences between calculators,
and that some are more reliable than others.
Which calculator should you
The best web calculators are the ones that ask lots of questions
about your home. You should only use a calculator that asks you for
lots of details, such as:
- Whether your house is built on a slope
- The quality of the internal fixtures
- The age of the house
- The postcode of your home (not just your state or
The best home insurance calculators take up to 15 minutes to
complete because you're getting a more personalised estimate of
what it will cost to rebuild your home if it is destroyed.
Use at least three calculators and compare the results. Go
online (look at blogs and forums) to find out other people's
experiences of home insurance estimates and see what they think
about various calculators.
Shop around to get better
Always check any differences in the cover offered by different
insurers, as well as the price.
When it is time to renew your home insurance, shop around and
you might be able to get more cover for the same price.
Also consider any differences between the policies offered by
the insurers you are comparing. You will generally be better off if
you have a higher level of cover.
Always shop around and get the most for your
money. You might also opt for a higher excess so you can reduce
Last updated: 07 Jan 2016