How to tell if your home is adequately insured

Your home insurance questions answered

• What is an insurance excess and what will it cost?
• What does sum insured mean?
• How do I make a home contents inventory for insurance?
• How do you make a home insurance claim?
• What is accidental damage cover for home insurance?
• How do I insure portable items that leave the home?
• What does underinsurance mean?

Underinsurance explained

Why you might be underinsured

When something unexpected happens, such as a natural disaster or burglary, unfortunately, many people find that they are underinsured. In other words, they do not have sufficient insurance to help cover the cost of rebuilding and replacing their home and possessions to the same standard.

RACV Head of Home & Business Insurance Bill Bloodworth says there are two key reasons why people may be underinsured.

"From talking to RACV Members, we believe the two key reasons for underinsurance are that many people forget to appropriately insure items around their home, and they also forget to update their insured values to reflect today’s replacement values," Bloodworth says.

So how can households help make sure their insurance accurately covers the true value of their home and all the valuables inside?

How to avoid being underinsured

Use a calculator

A simple way to estimate what it might cost to rebuild or repair your home in the event of a disaster or damage is to use the RACV Home Buildings Calculator,^{^}  which takes into account factors such as when your home was built, and to what standard.

The calculator also includes the cost to demolish and remove debris, which should be included in the sum insured. 

"Your estimated repair or rebuilding costs can significantly differ from the actual amount required," Bloodworth says.

For example, a replacement build must meet the latest building codes, including higher standards for energy efficiency, while an allowance should also be taken into account for services such as architects or engineers, if required, and other expenses that are part of the home, such as disabled access, fire sprinkler systems, solar panels, and ongoing inflation for building costs.

It’s also important to include home features such as garages and carports or garden landscaping and pools, as well as interior finishes, including bathroom tiles or marble benchtops.

The RACV Home Buildings Calculator^{^} also accounts for factors such as the number of rooms and whether the house is single or multi-storey. 

Generally speaking, the bigger the house, the more it may cost to rebuild.

Understand your property zoning

Changes in building codes and planning zones, especially following a natural disaster, can significantly increase the cost of rebuilding or repairing a house, with the result that people end up with insufficient insurance. 

A quick search on landchecker.com.au, an online portal which has detailed information on properties across Victoria and New South Wales, will reveal zoning information about your particular property, such as whether it is in a bushfire zone, and therefore subject to stringent – and potentially more expensive – building codes.

Take stock of your belongings: current market value and quality

Regardless of whether you're a homeowner, landlord or renter, an accurate assessment of the value of all the contents in your home is important when calculating the cover required to avoid being underinsured. 

Bloodworth recommends dedicating some time to adding up the cost of everything from your jewellery collection to your wardrobe contents.

Using a household inventory checklist, set aside some time to walk through every room in your house, and research what each item would cost to replace. 

When doing your audit, don’t forget to consider the standard of your contents, such as heirloom jewellery, luxury watches and leather couches, as this may impact the amount of insurance cover you require.

The RACV Home Contents Calculator* can help you make an assessment on the value of your contents. You will still need to note big-ticket items, but the calculator makes estimates based on such things as the number of occupants, and the size of the house.

The RACV Home Contents Calculator also takes into account the number of bedrooms, living areas, bathrooms and other rooms as an indication of the size of the home, as well as the extent of furniture in each room.

Again, the bigger the house and the more contents you have, the more likely you will have a higher value of contents to insure.

Things to remember when estimating your contents insurance^*

_{The information provided is general advice only. Before making any decisions please consider your own circumstances and the Product Disclosure Statement and Target Market Determinations. For copies, visit racv.com.au. As distributor, RACV Insurance Services Pty Ltd AFS Licence No. 230039 receives commission for each policy sold or renewed. Product(s) issued by Insurance Manufacturers of Australia Pty Ltd ABN 93 004 208 084 AFS Licence No. 227678.}

^{^ Building Calculator: The Cordell Sum Sure Estimate is an estimate of the cost to rebuild the improvements on your property and is generated by the Cordell Sum Sure Calculator which uses available property attribute information (including information you input or confirm) and/or information collated by CoreLogic about the subject property (from insurers and other third party sources) and analyses them against construction industry data to statistically derive a rebuild estimate through a series of computer implemented algorithms (Cordell Sum Sure Estimate).}

^{The Cordell Sum Sure Estimate does not take into account individual design features, site specific conditions, structural conditions and materials, local planning laws or any other regulations and may not be suitable for your particular circumstances. The Cordell Sum Sure Estimate is an indicative guide only and must not be relied upon as an accurate representation of the costs associated with rebuilding your property or in lieu of appropriate professional advice.}

^{While CoreLogic uses commercially reasonable efforts to ensure the Cordell Sum Sure Estimate is current, CoreLogic does not warrant the accuracy, currency or completeness of the Cordell Sum Sure Estimate and to the full extent permitted by law excludes all loss or damage howsoever arising (including through negligence) in connection with the Cordell Sum Sure Estimate.}

_{* Contents Calculator: Typical home contents replacement costs are provided by Sum Insured. Whilst all reasonable care is taken to ensure the accuracy of the information as a guide for costing building contents replacement costs, no responsibility is accepted by Sum Insured for its accuracy. Please check with a Valuer or other suitably qualified professional for an accurate costing estimate. Insurance Australia Limited (A.B.N. 11 000 016 722) takes no responsibility for the costs provided by Sum Insured nor any liability for the accuracy of or reliance upon or use of, the costs. This service is licensed to Insurance Australia Limited (A.B.N 11 000 016 722) for use by its customers. © 2024-2025 Sum Insured is a trading name of Land Services SA Operating Pty Ltd (ACN 618 229 815) as trustee for Land Services SA Operating Trust (ABN 86 836 650 939). The building contents replacement cost calculator is registered under Australian Patent Number 2010202987.*Terms, conditions, exclusions and limits apply.}