What Is Sum Insured?

What Is Sum Insured?

The sum insured is the ceiling on what your insurance company will pay out if your home is damaged or destroyed. It should reflect the full cost of rebuilding your home from scratch, including demolition, site clearance, professional fees, and construction costs at current market rates.

Many Australian homeowners are underinsured — meaning their sum insured is lower than the actual cost of rebuilding. The Insurance Council of Australia has repeatedly highlighted underinsurance as a significant issue, particularly as construction costs have risen substantially in recent years.

How to Calculate Your Sum Insured

• •Use a reputable building cost calculator (such as those provided by the Insurance Council of Australia or major insurers) to estimate current replacement costs.
• •Include demolition costs, site clearance, council fees, and professional fees (architects, engineers) in your calculation.
• •Account for any renovations, extensions, or improvements made since the policy was last updated.
• •Consider the cost of complying with current building codes, which may require upgrades beyond a like-for-like replacement.
• •Review your sum insured annually and adjust for construction cost inflation.

If your sum insured is too low and your home is significantly damaged, you may face a substantial shortfall. Some policies include an automatic increase provision (typically 10-25% above the stated sum insured) as a buffer, but this should not be relied upon as a substitute for an accurate figure.

How Oxide Handles This

At Oxide Construct, our technology-driven approach to insurance repair means sum insured is handled transparently. Track your claim in real-time through our platform, with a dedicated assessor as your single point of contact throughout the process.

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