The value of Australia's housing market is skyrocketing, with the strongest recorded annual growth of 23.7% recorded in 2021.*
So should you increase your sum insured on your homeowners’ insurance policy? It depends, says George Pipertzis, Assistant Director Product Pricing and Underwriting at DSH Insurance.
‘There are many factors that affect the cost of rebuilding or reinstating part of your home, such as increases in the cost of building materials and labour,’ says George.
Understanding your sum insured and underinsurance
At DSH Insurance, we reduce the risk of under-insuring by estimating the replacement cost of your home. We also include an amount to cover those extra expenses you may incur after a partial or a total loss to rebuild, such as temporary accommodation, demolition costs and extra costs related to re-building.
To help keep pace with rising building costs, we automatically increase the sum insured amount of your home at the end of each insurance period.
‘The sum insured amount is not calculated on the price you paid for the property, or its market value. It is your estimate of how much it would cost to rebuild,’ says George.
Why your premium may change?
DSH Insurance takes a range of factors into account that may have an impact on the calculation of your premium. These include the cost to replace and/or rebuild your property, the sum insured amount and the location of your home at the address level of your property. We also take into account the risk of bushfires, storms, earthquakes, and floods.
‘This individualised premium pricing methodology ensures policyholders’ are charged cost, which is in line with the level of risk of their property. For example if the property backs onto a river, the premium calculations may attract a higher amount due to the greater flood risk.’ says George
Use DSH Insurance’s Building Cost Calculator to estimate how much it would cost to rebuild or re-build your home. The estimate will be a guide only and not a professional valuation.
*Aussie property prices record biggest 12-month price jump in history (9news.com.au)