An ongoing market survey into home building replacement costs in Australia is being conducted by Cordell Information, Australia's leading authority on building insurance cost information.
The research work looks at both the overall level of home building insurance cover as well as the process by which consumers calculate their home building replacement costs.
Survey respondents are required to answer questions over the web using Cordell's Residential Valuer tool. These questions relate to the location, age, size and quality of their home. The details are then used to produce a Dynamic Elemental Cost Model (DECM) of the respondents home.
To date a total of over 30,000 people have participated in the survey.
In summary, 79% of respondent's home buildings were underinsured, with the average rate of underinsurance being 34%.
Follow Up Survey
As a follow up to this work Cordell conducted a survey of approximately 1,000 of its own customers to determine people's preparedness to increase their amount of insurance cover.
To add weight to the findings Cordell mystery shopped six of the major Insurance companies who were offering home building insurance and recorded the cost of insuring a property for an additional $50,000.00 worth of cover. The average cost of this additional insurance was $41.00 per annum.
20% of the survey respondents were then contacted and asked the following question:-
"If you found out your home was underinsured, through a reputable independent source, by the industry average of 34%, would you be prepared to spend an additional $50 per annum to be insured for the correct replacement cost?"
94% of the sample answered "Yes" to this question.