As insurance brokers, we often remind clients that insurance is designed to put you back on your feet after a loss. A key part of making sure this happens smoothly is checking that your sums are accurately insured and reflect today’s realities.
For home and landlord insurance, the sum insured is, in most cases, the maximum amount the policy will pay to rebuild your home or replace your belongings. Industry bodies such as the National Insurance Brokers Association (NIBA) frequently point out that many Australians unintentionally insure their homes and contents for amounts that no longer reflect the current replacement costs, largely due to inflation and rising building expenses.
What might have been an adequate sum insured five years ago may no longer be sufficient to cover a full rebuild today.
Building costs have increased significantly in recent years, driven by labour shortages, material costs and updated building standards. What might have been an adequate sum insured five years ago may no longer be sufficient to cover a full rebuild today. The same applies to contents, where replacement costs for furniture, appliances and technology have steadily risen.
When a claim occurs, this gap can become clear. If the true cost to rebuild or replace your home exceeds the sum insured listed on the policy, insurers cannot pay beyond the stated limit unless the policy includes additional benefits. Insurance News has noted that outdated sums insured can slow down claims, as the rebuild scope of works and valuations require careful assessment before settlement decisions can be made.
This situation is rarely the result of oversight or poor decision-making, as values change quietly, and most people understandably assume their cover is “about right”.
Checking your sums insured throughout the year and after renovations, major purchases, or lifestyle changes helps your policy continue doing what it’s designed to do. A few minutes spent reviewing your sums insured today can help avoid unnecessary financial stress at the very moment you’re relying on your insurance the most.
To review your sums insured, talk to your MGA broker today. www.mga.com
