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 calculators

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 used
  • 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 years old.

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 use?

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 territory)

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 value

Smart tip

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 your premium. 


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Last updated: 07 Jan 2016