Why Every Property Owner Should Review Their Cover Now

Australia’s weather is becoming more unpredictable — and more destructive. From cyclones to floods, bushfires to hailstorms, natural disasters are hitting harder and more often. But here’s the worrying truth: more than 1 in 5 Australian homes are either uninsured or underinsured, leaving over 1.4 million households financially exposed when disaster strikes.

The Insurance Reality Check

  • 4% of homes have no insurance at all.
  • 15% are covered — but not for the full rebuild cost.
  • 19% of contents policies are underinsured.
  • 10% of households have no contents cover whatsoever.

With national property values topping $11 trillion, this means over $2 trillion worth of property could be left partly — or completely — uncovered in the event of a disaster.

When the Storm Hits

Recent events show the cost of inadequate cover.

  • The 2024–25 summer saw hailstorms in the ACT, floods in Far North Queensland, and Tropical Cyclone Alfred — resulting in more than 95,000 insurance claims and losses nearing $1 billion.
  • Queensland’s North Queensland floods and TC Alfred combined have caused over $1.2 billion in insured losses this year alone.
  • In the 2019–20 summer, insurers paid $5.47 billion for bushfire, flood, and hail claims. In 2022, disaster-related claims reached $7.28 billion.

The Insurance Council of Australia warns that, despite being a “well-insured nation”, Australia faces a significant protection gap — where losses are either only partly covered or not covered at all.

Why So Many Are Underinsured

A major culprit is incorrect “sums insured” — the maximum amount your insurer will pay. Many homeowners:

  • Underestimate rebuilding costs, especially as construction costs have risen 40% in the past three years.
  • Forget to factor in debris removal, architects’ fees, or compliance upgrades (e.g., bushfire or cyclone-resistant building requirements).
  • Base insurance on property market value rather than replacement cost.

When the real rebuild cost exceeds your cover, you’re left to fund the shortfall yourself — and for many, that means the home is never fully rebuilt.

How to Protect Yourself

Regularly reviewing your policy can save heartbreak later.

For Building Insurance:

✔ Base sums insured on full replacement cost — including fixtures, structural improvements, sheds, driveways, fencing, debris removal, and compliance upgrades.
✔ Exclude land value — insurance should cover structures only.
✔ Update sums insured every year to reflect current construction costs.

For Contents Insurance:

✔ Take a room-by-room inventory — don’t forget sheds and garages.
✔ Use current replacement costs, not original purchase prices.
✔ Add specified item cover for high-value goods like jewellery or artwork.
✔ Include optional covers like portable contents if needed.

Tip: Online calculators can help estimate costs, but for the most accurate figures, consider a professional assessment by a quantity surveyor or builder.

Bottom line:
Natural disasters don’t just damage property — they expose insurance shortfalls. Don’t wait for a storm, flood, or fire to find out your cover isn’t enough. Reviewing and updating your insurance today can mean the difference between rebuilding and starting over from scratch.