Calculating the replacement cost of your home and contents

Allianz Home Insurance

It is estimated that 23% of, or 1.8 million, Australian households are not covered for buildings or contents insurance, and therefore are not protected if the worst or unexpected occurs1. It is also estimated that a further 80% of homes are under insured which is a concern given the increasing intensity and frequency of catastrophic loss events including hailstorms, bushfires, floods and cyclones2.

Accurately determining the replacement cost of your building is important.


When a policy does not fully cover the cost of replacing your home and contents, you might be underinsured. One reason that can cause this is if you inaccurately calculate the replacement cost of your home and contents. With the cost of building a new house having increased four-fold over the past 20 years, it is vital to calculate your rebuilding and replacement costs accurately3.

Insurers use indexation rates to increase the sum insured to adjust for increased costs when you are offered your insurance renewal. Despite this, as noted by ASIC:

”More Australians have inadequate protection, with the Australian Securities and Investments Commission stating that up to 80 percent of homeowners are underinsured. If the total amount you have insured your home for is less than what it would cost to rebuild then you are underinsured.”1

This is why it is important to check the cost of replacing your home and contents at each renewal so that the sum insured is adequate. Building code changes that could impact significantly on the cost of rebuilding and renovations are two factors to be aware of when checking the sum insured. It is also important to consider cover for the cost of demolition and the removal of debris related to the destroyed or damaged part of the building.

One way of calculating the replacement cost of your home and contents is by using online calculators that work out 'the sum insured'. The most reliable and thorough calculators ask many detailed questions4. Allianz offers home building and contents replacement cost calculators on our website to help customers estimate the replacement cost of their home and contents.


With the family home being the primary asset for many Australians, it's vital for homeowners to know the precise replacement cost3. As construction costs have increased, particularly in the last 10 years, it's important to calculate the replacement costs accurately5. There are two main methods for estimating the sum-insured cost (the amount it would cost to rebuild and replace your home and contents). The 'cost per square metre' approach is based on the house size and some very basic information, but can be very inaccurate in terms of actual replacement cost1. More advisable is 'elemental estimating', which tends to be more closely aligned to the actual cost. It takes into account different elements of a building and calculates rebuilding costs using local wage and material prices1.

Allianz's home building replacement cost calculator asks questions about your buildings including the location, period of construction, size (area and floors), construction quality and materials used. Other features of the house such as bathrooms, kitchens, balconies, garages, security, heating, lighting and water systems are considered in terms of their number and size to provide more specific data to help estimate the replacement cost. It is important to note that the Allianz calculator is an estimate based on averages. Your specific circumstances may be different: to determine the replacement cost of your buildings, you will need to consult an architect, a builder or a valuation expert.


Contents insurance covers the cost of replacing or repairing your possessions6. With four out of five Australian property owners and tenants are uninsured, it's essential to have your possessions correctly valued1. When it comes to estimating the replacement cost of contents, online calculators can be used, however a better (although admittedly more labour and time intensive) method is to record how much it would cost to replace every item in your house7. Bear in mind that many items can be overlooked due to their everyday nature including crockery, cutlery, bed linen, books, DVDs, Blu-Rays clothing and footwear - but these would still have to be replaced in an insured event8. Taking clear pictures and retaining proofs of purchase (such as receipts) will also assist in the calculation of the true cost of your contents, should they need to be replaced6.

Allianz's home contents replacement cost calculator can help you estimate your contents' replacement cost. The initial estimate is based on the quantity and quality of your contents and the number of rooms, balconies, garages and sheds. The special items pricing area allows customers to put down the precise value of possessions they consider valuable to them such as jewellery which require specifying in their policy. Based on this information the calculator makes an estimate of your possession, for example, the number, quality and value of washing machines. You should also consider the Product Disclosure Statement for how you would be covered for items such Jewellery or items considered valuable or need to be noted on your policy.

After the initial estimate, you can modify the assumed possessions list to make the estimate more accurate. The calculator is provided by Sum Insured, a company that specialises in the research and production of building contents information2. It is important to note that the Allianz contents calculator provides an estimate based on averages. To determine the replacement costs of your specific contents you will need to consult a valuation expert or compile a detailed inventory of all your contents.

Avoid underinsurance

It's vital to calculate the replacement cost of your home and contents accurately so you don't end up with extra replacement costs if your home or contents are damaged or destroyed. Regularly adjusting the sum insured on your home insurance policy based on the accurate calculation of replacement costs will help you avoid underinsurance.

Accurately determining the replacement cost of your building is important.

1 Australian Government of Veterans Affairs, 2021, Australian Government, Is your home at risk of underinsurance?

2 Australians Urged to Recalculate their Contents Insurance, March 2020, Sum Insured,

3 Australian Bureau of Statistics, Australian Government, 2021,

4 Money Smart, Choosing home insurance,, 2021, Building demand drives 1.4% quarterly increase in Australia’s housing construction costs,

5 CoreLogic, 2021, Building demand drives 1.4% quarterly increase in Australia’s housing construction costs,

6 Money Smart, Home Insurance,

7How to find the right home and contents insurance policy, 2021, Choice,

8 Household Inventory Checklist, 2014, UnderstandInsurance,

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.