Does Sum Insured reflect value?

As Aussies, we often adopt a ‘She’ll be right mate!’ attitude to life. It can be commendable, but can also put us at risk of suffering devastating losses. Take those now struggling to rebuild after bushfires destroyed their homes earlier this year because they weren’t properly insured…

On the 12th of January this year, a bushfire tore through the Perth Hills destroying 56 properties and damaging many more homes, businesses and cars.

A few days later, media reports showed some 300 insurance claims had been lodged totalling estimated losses of $13 million.

In October last year, more than 200 homes were lost in fires in the Blue Mountains with the total insurance cost estimated to be over $183 million.

But as those affected start the process of rebuilding, the National Insurance Brokers Association has reported that many are confronting the grim reality that their home was drastically uninsured and therefore can’t afford to replace it.

According to NIBA, the biggest issue has been changes in building standards, particularly over the past four years, which have increased the cost of rebuilding.

To avoid a similar fate, MGIB is urging its clients to review their home’s Sum Insured value on a regular basis.

Care should also be taken with sum insured calculators on insurance websites by ensuring the full cost of rebuilding – including current building standards and codes – are taken into account.