House Insurance Calculator

Making sure your property has an accurate Sum Insured, or replacement value, is the single most important thing when insuring a house. Insurance is designed to protect homeowners from financial ruin, so it’s crucial that such a major asset is insured for what it would actually cost to rebuild it.

House Premium Calculator Replacement Value Calculator

What is Replacement Value?

The replacement value is the amount it would cost to rebuild the house as a new one.  It also includes the site improvements such as driveways, fences, and sheds.  It is the replacement cost of the entire property should you have to start from scratch with only the land.  

Unlike present-day or indemnity value, replacement value is where the rebuild is new for old.  That means brand new building materials, so that a replacement value insurance policy provides the owner with a better and newer house to what was there previously.

What does 'Sum Insured' mean?

The sum insured of a house is the maximum amount that will be paid out during a ‘total loss’ event, such as the house burning to the ground or being destroyed in an earthquake.  

So for robust house insurance, the sum insured should represent the same figure as the replacement value.  The homeowner should take a prudent and calculated approach to determine the sum insured so that it is as close as possible to the replacement value of the property. A house insurance calculator can assist you with this process but for total accuracy, the services of a quantity surveyor should be used. 

Why do people get the rebuild cost of their home wrong?

A 2016 Treasury report stated that up to 85% of dwellings in New Zealand could be underinsured by an average of 28%. Underinsurance of homes across the country was estimated to be worth $84 billion. There are various reasons as to why people end up underinsured (and sometimes over-insured). The main reason is that people are not experts on building costs so it’s very difficult to get an accurate estimate.  

Another significant reason for widespread under-insurance is that costs included in the replacement sum insured are often not considered by policyholders. The replacement sum insured includes all the direct costs typically associated with building a home. However, it also includes compliance costs, professional fees, other fees and demolition/removal costs. When such costs are ignored by insured parties, it contributes to the underinsured shortfall for fully replacing the home. 

Other than a lack of knowledge on costs, some people may purposely choose to under insure their home to save premium.  This is approach is very dangerous and not recommended as in the event of a major loss it may leave the home owner without adequate funds to rebuild.  The premium saved when doing this is also likely to only be a modest sum. If a lower premium is a motivator for the homeowner it is best to select a high excess (eg $2,000 or even $5,000). This will result in a premium reduction and means you will need to contribute more in the event of a claim. However, meanwhile the big important losses are still well covered. Insurance is about worst-case scenario so making sure the big things (fire, flood, storm etc) are adequately insured is key.

Sum Insured vs. Replacement Policy

In the past it was the norm for house insurance policies in New Zealand to have no sum insured, and homes were simply insured for replacement of the dwelling up to its pre-damage size – with no maximum cap on the payout. This was very effective in removing the risks of homes not having adequate insurance.

However, following the major Christchurch Earthquakes of 2010 and 2011, insurers in New Zealand were left struggling with unexpected and inflated house repair costs as it was difficult to estimate their total potential payouts with uncapped replacement policies. Following the troubles arising from the Christchurch earthquakes, the majority of insurers in New Zealand changed to “sum insured” replacement policies – where the insured and insurer agree on a maximum amount to be covered.

Making sure you are not under-insured

Knowing what to insure your property for can be hard. Thankfully, there are various tools that can help you with your responsibility of selecting your sum insured.  

We strongly recommend taking the time to utilise resources on accurately estimating your sum insured value. The Cordell Sum Sure calculator is an excellent option that uses council and government records on New Zealand properties to estimate the cost to rebuild your home. 

The initio property insurance quote calculator will default to $2,000 per square meter replacement value. This is simply a base estimate for the rebuild cost and is not a sum insured calculator. Your sum insured can be easily be amended by adjusting the value on the initio quote screen.

How often should I check my sum insured?

At intio, we recommend you check your Sum Insured value each year to make sure you are adequately covered based on the current and up to date market building costs, labour costs and inflation.

Under an annual initio house or landlord/holiday home insurance policy, we will ask you to review and renew your sum insured figure at each annual renewal.

Getting the sums right

No one knows a house like the person who owns it.  To determine the insured value of a home Sorted talks about how this works

Sorted – what would it take to rebuild

Rebuild valuation by an expert

The most accurate way of understanding the cost to rebuild a property is a full elemental breakdown of the cost.  Quantity surveyors are qualified to undertake this work.

Construction Cost Consultants 

Instant house insurance replacement value calculator

Online replacement value calculators provide a very useful indication of the actual cost to replace the property by simply entering the property address.  Replacement value calculators use public data and other material costs to calculate the value.

Quick replacement value house insurance calculator

A guide to rebuilding in NZ

Guide discussing building costs and calculating sum insured in New Zealand

Confused – how to calculate rebuild costs