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Home insurance is made up of two separate parts, building insurance (your house, shed, fences etc) and contents insurance (your possessions including furniture, clothing, appliances etc).
Home insurance provides financial protection against losses and damages to your house and its contents. It typically covers damage from events like fire, theft, and natural disasters, ensuring that homeowners can recover and rebuild if necessary.
Home insurance is essential because it protects one of your biggest investments—your home. It provides peace of mind knowing that if something unexpected happens, like a natural disaster, theft, or accident, your home and belongings are financially covered and can be replaced at no (or very little cost) to you.
Contents insurance is part of home insurance that covers the cost of replacing or repairing your personal belongings if they are damaged, stolen, or destroyed. This includes items like furniture, electronics, clothing, and other personal possessions.
To determine the value of your home contents, you can make a list of all your belongings and add up all their values. Alternatively, use our home contents calculator to get an accurate estimate in minutes. Regularly update this list to reflect any new purchases or changes in value.
Contents insurance typically covers:
The sum insured value represents the total value of your insured property and contents, ensuring you can replace or repair your home and belongings if needed. Essentially, the sum insured value should be the price you’d pay today to rebuild your home and replace every single one of your possessions.
The sum insured value is calculated based on the cost to rebuild your home and replace your belongings at current prices. Use our sum insured calculator to get an accurate estimate.
Underestimating the sum insured value can lead to underinsurance. This means the replacement cost is more than your insurance cover, so you may not receive enough money to fully cover your losses if you make a claim, leaving you with significant out-of-pocket expenses.
Underinsurance occurs when the sum insured value of your property and contents is less than their actual value at today’s prices. This can result insufficient payouts if you need to make a claim.
For example, you might have insured your home contents for $100,000 (known as the sum insured), but when it all needs to be replaced after a fire, you discover that the actual replacement cost is $150,000 meaning you are underinsured by $50,000 or 25%.
Note that while increasing your sum insured will increase your premium (the price), it is often only a small increase (eg lifting your home contents sum insured by 25% might only result in a 5% premium uplift).
To avoid underinsurance you can:
Common causes of underinsurance include:
A home contents insurance calculator is an online tool that helps you estimate the value of your personal belongings. By entering details about your home and possessions, you can ensure you better understand your appropriate coverage.
To use the home contents insurance calculator:
Click the following links to access our calculator for:
Yes, our home contents insurance calculators are free to use. They help you accurately assess the value of your belongings and ensure you have the right level of coverage.
Inflation can increase the cost of rebuilding your home and replacing your contents. Ensure your sum insured value reflects current prices to avoid underinsurance. Regularly update your policy to account for inflation and rising costs.
We analyse inflation closely and publish an index to demonstrate it’s affects on home contents values. For example, based on the contents of an average Australian home, the value of home contents has increased 23% between 2014 and 2024.
If you renovate your home, update your building insurance policy to reflect the increased value. Renovations can significantly increase the cost of rebuilding, so ensure your sum insured value is adjusted accordingly.
Review your insurance policy at least once a year or whenever there are significant changes to your property or belongings. Your insurer should send you renewals information including a recommended updated sum insured based on CPI and cost increases. But it is the policyholder’s responsibility to ensure that their sum insured is appropriate, not the insurer or underwriter.
It is the policyholder’s responsibility to set their own level of insurance coverage. Some insurers will recommend minimum levels of coverage, particularly for building insurance, and all good insurers will provide easy access to a sum insured calculator for consumers to use.
Insurers actually care very much about underinsurance because it is a direct cause of many poor claims experiences and broadly out of their control.
Making an insurance claim is not something people do very often, and when they do, it is because of something bad happening. They’ll often be emotional and are relying on their insurer help them get through a tough time, a service they’ve paid for via their premiums.
The insurer might process a claim quickly, but if the customer is underinsured, that becomes inconsequential. If the claim payment is insufficient, the customer might not be able to rebuild their home or replace all their lost belongings and will often pass blame straight onto the insurer.
This can lead to negative word of mouth, bad reviews, reputational damage or worse, a PR disaster. All because the customer has set a sum insured value too low for their home and contents.