How to estimate building replacement costs

Last updated on December 7, 2023
Insuring your home can be confusing, and you may be asking yourself ‘how much insurance do I need?’ From building replacement calculators to underinsurance, here’s what you need to know.
couple in kitchen at home

When you take out a building insurance policy, you’ll need to calculate the cost of rebuilding your property. This helps you decide your ‘building sum insured’. Why is this important? Your insurer will pay up to your sum insured for repairs or rebuild costs after building damage or loss due to an insured event.

If you want to insure your belongings inside your home, you’ll also need to work out their replacement value for contents insurance. You can find out more about insuring your home contents.

Building insurance covers the structures and fixtures that make up your home buildings, from the house itself, to your garage, fences, and built-in furniture. Guessing the replacement value may put you at risk of underinsurance, which is when you don’t have enough insurance cover to repair or replace your home after an insured event. Fortunately, there are a couple of ways to get a more accurate estimate.

A home building replacement calculator can help you estimate your home building replacement costs within minutes. All you need to do is enter your address and double check that the information for your building is correct.

It’s based on a range of factors, such as your home’s floor area, size, and quality of materials. The estimate’s accuracy will depend on the information you supply, so remember to include things like a pool or a granny flat. You won’t need to include the value of your land.

You may wish to get a rebuild valuation from a professional surveyor, builder or architect, at your own cost. This can help you decide on an accurate building sum insured for your home. Remember, this is different to a valuation from an estate agent who would give you the sale price of your home.

The costs of building materials, fixtures and fittings, architects, surveyors, and other professional fees can increase each year. That's why getting an updated valuation before renewing your building insurance policy can be worthwhile.

It’s important to note that the replacement value of your building isn’t the same as your home’s market value. For insurance purposes, the value of your home depends on a number of factors.

  • Location and the likelihood of natural disasters, such as bushfires1 or floods1 as you may be subject to specific building requirements
  • Design, e.g. modern architecture, Federation, or Victorian
  • When it was built
  • Construction details, including the type of building materials used
  • Quality of your building’s construction
  • Slope of your land your home is built on
  • Size, e.g. floor area, how many rooms, garage spaces, and balconies
  • Any special features, e.g. solar power, pool house or granny flat

If you update or renovate your home, you may consider updating your insurance too. You can find out more about getting the most from your policy in our article 'What is home and contents insurance?'

With Allianz Home Insurance, we’ll increase your sum insured automatically each year when your insurance is due for renewal. If you don’t want us to increase your sum insured, let us know.

We won’t adjust your sums insured for specified contents and portable contents, so you’ll need to review the value of these items. Don’t forget to add anything new.

To make sure your insurance covers the replacement value of your home, we recommend you check your sum insured each year. You’ll see your sum insured in your renewal documents.

Use these Home Insurance calculators to estimate your home’s replacement value.

Rebuilding costs, such as materials, labour and architects’ fees, tend to rise over time so your home’s replacement value is also likely to increase. If you’ve made home improvements or completed a full renovation, your home may be more expensive to repair or replace.

It’s important to make sure your sum insured accurately represents the value of your home building, or contents, or both. Therefore, it’s a good idea to check your home’s replacement value each year, before renewing your policy.

Here are six tips to help you estimate your rebuild costs.

  1. Don’t guess how much it would cost to repair or replace your home.
  2. Use a building replacement calculator or get a professional rebuild valuation.
  3. Include all your home building structures and fixtures, e.g. your shed, garage, and built-in furniture. 
  4. Keep track of home improvements, e.g. new marble benchtops, and add these to your replacement value.
  5. Review the replacement value of your home each year and update your sum insured when you renew your policy.
  6. Check that your policy meets your needs, e.g. includes debris removal or sum insured indexation.

Your home is likely to be your most valuable possession, and expensive to repair or replace. Keeping track of the replacement value of your home can help you get the insurance cover you need.

This article has been prepared by Allianz Australia Insurance Limited ABN 15 000 122 850 AFSL234708 ("Allianz"). In some cases, information has been provided to us by third parties and while that information is believed to be accurate and reliable, its accuracy is not guaranteed in any way.

Any opinions expressed constitute our views at the time of issue and are subject to change. Neither Allianz, nor its employees or directors give any warranty of accuracy or accept responsibility for any loss or liability incurred by you in respect of any error, omission or misrepresentation in this article.

  1. 72-hour exclusion period may apply

    We don’t provide cover for any loss of or damage to your property caused by cyclone, flood, grassfires and bushfires, during the first 72 hours after you first purchase a policy or increase your cover under an existing policy. For full details of conditions and exclusions please refer to the relevant PDS.

Allianz acknowledges Aboriginal and Torres Strait Islander peoples as the Traditional Custodians of the lands on which we live and work across Australia. We pay our respect to First Nations Elders past and present.

Any advice here does not take into account your individual objectives, financial situation or needs. Terms, conditions, limits, and exclusions apply. Before making a decision about this insurance, consider the relevant Product Disclosure Statement (PDS)/Policy Wording and Supplementary PDS (if applicable). Where applicable, the PDS/Policy Wording, Supplementary PDS and Target Market Determination (TMD) for this insurance are available on this website. We do not provide any form of advice if you call us to enquire about or purchase a product.

Allianz Australia Insurance Limited ABN 15 000 122 850 AFS Licence No. 234708 is the insurer of any general insurance products offered, and Allianz Australia Life Insurance Limited ABN 27 076 033 782 AFS Licence No. 296559 is the insurer of any life insurance products offered. Each entity is responsible for any statements and representations made about its products, on this website.