Total replacement insurance for home buildings

Earlier this year our former CEO, Catriona Lowe, appeared on ABC TV’s The Checkout suggesting that consumers look for total replacement cover when shopping around for insurance. Since then we’ve had a number of people contact us saying that they are having trouble finding an insurer which offers total replacement.

Total replacement insurance for home buildings can be hard to find, but it does exist and it’s a product Consumer Action would like to see more insurers offer.

Most home owners will be familiar with ‘sum insured’ policies – this is where you’re covered for a specific and predetermined amount. But this type of insurance has inherent problems:

  • It can be difficult to accurately value the cost of replacing your home and it’s easy to choose a level of cover which leaves you under-insured;
  • Inflation can mean that, even if you originally had an appropriate level of coverage, that amount soon becomes inadequate, leaving you under-insured; and
  • Rebuilding after natural disasters can be more expensive than usual because the increased demand for tradespeople pushes prices up.

So if you want to ensure that you’re covered for the full value of a house rebuild, shop around and ask about the differences between total replacement cover and sum insured policies before making a decision. You could also consider reviewing the information provided by the independent consumer organisation, CHOICE, which regularly reviews and compares home and content insurance.

In the meantime, we’ll continue to push insurers to offer total replacement policies to cover both home and contents so Australians are protected when they need it most.

Please note: Consumer Action does not provide advice about individual insurance products or companies, and cannot advise you about which insurance product is best for you.

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1 Comment

One thought on “Total replacement insurance for home buildings
  1. This is misleading also….total replacement cover is a scam. It means the insurer will only pay for what it costs them to replace it which is 40-50% less than any quotes. They will not be transparent with the quotes and the consumer cannot challenge it easily as there is no contract specifying the “sum insured”. It is merely whatever the insurer thinks they can get awy with and not actual replacement. They would rarely look to replace/rebuild as it is too much hassle and cost involved. They just say the house costs $500K, gie ourselves a50% discount and we will settle for $250K. When the consumer gets the quotes and factors in additional demolition work, waste removal, time wasted dealing with imbeciles in councils, engineering reports, soil reports, surveyors, etc etc…the true cost will come to 750K and voila….the insurer has screwed the consumer for a cool $500K

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