What Is Underinsurance in Australia?

Key Points

• Sum insured below actual replacement cost means you bear the shortfall on a total loss
• Over 80% of Australian homes are estimated to be underinsured
• Building costs have increased significantly — check your sum insured annually
• Some policies include an 'underinsurance clause' or 'average clause' that proportionally reduces all claims, not just total losses
• Use a professional rebuilding cost calculator to set your sum insured correctly