Sum insured explained
Sum insured is the amount your home or contents are insured for. It can affect how much you’re covered for if you claim, and how much you pay for insurance. Reviewing it regularly can help make sure your cover reflects the current cost to rebuild, repair or replace what you own.
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When your home insurance renewal arrives, it’s easy to focus on the premium. But it’s also worth checking your sum insured.
Getting your sum insured right matters. If it’s too low, you may not have enough cover to rebuild your home or replace your contents after a major claim. If it’s too high, you’ll be paying for more cover than you need.
What does sum insured mean?
Your sum insured is the amount your property is insured for. For home insurance, this usually means the amount listed for your building, your contents, or both.
Your building insurance should reflect how much it would cost to repair or rebuild your home if it’s damaged or destroyed. If you have contents insurance, your contents sum insured should be based on how much it could cost to replace your belongings.
Then, if you make a claim, your sum insured is usually the maximum amount your insurer will pay, depending on your policy and type of cover.
Some QBE Home Insurance policies (including Landlord Insurance) come with a Buildings Sum Insured Safeguard benefit. That means if you have an approved claim, we could pay up to 30% more than the buildings sum insured amount. Check your Certificate of Insurance and PDS to see if you’re eligible.
The sum insured isn’t the same as:
- How much you paid for your home
- Your home’s current market value
- The value of your land
- The amount you owe on your mortgage.
That’s because home insurance is usually about the cost to repair or rebuild your home, not the price someone might pay to buy it.
Related article: 5 tips to review your home insurance
Why should I review my sum insured?
The cost to rebuild a home can change over time. Building materials, labour, transport and repair costs can all go up. That means the amount that was right for your home last year may not be right today.
It’s a good idea to review your sum insured when your renewal comes through, and whenever something changes at your home. Keeping it up to date can help make sure your insurance still suits your needs.
You may need to update your sum insured if:
- You’ve renovated or extended your home
- You’ve added fixtures or fittings
- You’ve bought valuable items for your home
- Your family or living situation has changed
- You’ve changed how you use your home
- Building and labour costs have changed.
Try these handy calculators
Why it’s important to get it right
| If your sum insured is | What it can mean | What to think about |
|---|---|---|
| Too low | You may be underinsured and might not have enough money from the claim to fully rebuild or repair your home. | A lower sum insured may reduce the premium, but it could leave you with a major shortfall after a large claim. |
| About right | A correct sum insured is likely to reflect the realistic cost of repairing or rebuilding your home. | This is the balance most people should aim for: cover that still provides meaningful protection. |
| Higher than needed | If your sum insured is higher than the cost of repairing or rebuilding your home, you might pay more for your premium than necessary. | More coverage can cost more, so check whether the amount is realistic and in line with your needs. |
What is underinsurance?
Underinsurance is when your sum insured is too low to cover the cost of repairing, rebuilding or replacing what you’ve insured. For example, if your home is insured for less than it would cost to rebuild, you may need to pay the difference yourself if you make a major claim.
Underinsurance can happen when:
- A home or its contents are undervalued
- Renovations or upgrades are not added to the policy
- New belongings are not included in the contents value
- The sum insured hasn’t been reviewed for years.
You don’t want to find out you’re underinsured at claim time. That’s why it’s worth reviewing your sum insured regularly.
How can my sum insured affect my premium?
Your sum insured is one of the things that can affect your home insurance premium.
A higher sum insured could mean a higher premium, as your insurer may have more to cover if you make a claim. A lower sum insured might reduce your premium, but it could also leave you out of pocket if it doesn’t reflect the actual cost for a rebuild or repairs, or replace what you own.
So, while it can be tempting to reduce your sum insured to lower your home insurance cost, it’s important to weigh up the cover you’d want in place if something happened.
Related article: How to avoid water damage in your home
How do I check my sum insured?
When your renewal arrives, you can review your policy details including:
- Check the building sum insured listed on your policy
- Check the contents sum insured if you have contents cover
- Think about any renovations, upgrades or new purchases
- Consider current rebuild and replacement costs
- Use a home building calculator or contents calculator as a guide
- Speak with your insurer if you’re not sure.
Things to keep in mind
- Would the sum insured amount be enough to rebuild my home today?
- Does it include demolition, debris removal and professional fees?
- Does it include external structures like garages, decks, driveways, or sheds?
- Have I renovated or improved the property since I last reviewed my policy?
- Could rebuilding in my area cost more after a severe weather event?
- What would happen if my sum insured was too low?
- Are there other ways to manage the premium without reducing the sum insured too much?
Bottom line
Your sum insured is a key part of your home insurance. It helps decide how much cover you have, and it can affect your premium. A good approach is to review your cover regularly, use tools as a guide, and make a choice that balances affordability with the protection you need.
Checking it at renewal can help you feel confident that your cover still suits your needs. At the heart of it, home insurance is about helping protect the place you call home.
