What would it really cost to rebuild your building today?

• The insurer does not value your building or advise you on the number. In our experience a short sum insured can renew for years without the insurer testing it.
• MCG Quantity Surveyors found the buildings it valued were insured on average about 24 per cent short of the rebuild cost. On industrial property it was 31 per cent.
• You can have a desktop building replacement estimate, free, for a new policy and at every renewal.

It is an assessment of what it would cost to rebuild your building, worked out from aerial and street imagery. We commission it for our purposes as your broker, to inform the advice we give you.

It is not a site visit, and it is not what the property would sell for or what an agent would appraise it at. Our guide sets out why a sum insured is not the market value.

Picture a building that costs $2.2 million to rebuild, insured for $1.5 million.

A partial loss. A storm does $300,000 of damage, and the co-insurance clause, also called an average clause, applies. On the business packs we place, the test is 80 per cent of the full rebuild cost. Where it runs on the sum insured itself, as it does on some, this building needed $1.76 million but carried $1.5 million, so the payout is scaled down to about $256,000 before excess. The owner finds the other $44,000 or so, plus the excess.

Some policies test a figure 20 per cent above your sum insured. In this example that is $1.8 million, which clears the $1.76 million threshold. On that test, the average clause would not reduce the $300,000 repair claim. The policy's other terms and excess still apply.

A total loss. The building is destroyed. Most of the policies we place pay up to 20 per cent above the amount you insured it for. If the policy pays $1.8 million towards the $2.2 million rebuild, the owner finds the other $400,000, on a cleared block.

If you claim on a policy we look after, a specialist claims manager on our team will take it up with the insurer. Your broker will stay involved.

The formula is in The Co-Insurance Clause: What Every Building Owner Must Know.

Some policies waive the underinsurance penalty when the valuation and sum insured meet their conditions. Check what assessment the policy requires, any conditions about keeping it current, and the amount it requires you to insure. We can explain what your policy requires.

The insurer still decides each claim. Many others have no such waiver. Where the clause stays on, the sum insured still needs to meet the policy's test. A current valuation helps you set that figure. For the rest of the building's cover see Commercial Building Insurance, and for everything else a building owner can hold, commercial property insurance.

An online calculator can work off broad averages, so it can miss what your site needs: demolition and clearing, professional and council fees, code upgrades, and price movement. A figure that looks fine can still fail the 80 per cent test when you claim. How far rebuild costs have moved is in construction cost increases in Australia.

The insurer's calculator, and a total loss

In one published case on a home policy, an owner trusted the insurer's own calculator and insured their building for $495,000. A fire made it a total loss, and the insurer's two builder quotes came back at $637,659 and $656,674. The insurer paid the sum insured plus the policy's additional benefits, and no more.

The owner went to the Australian Financial Complaints Authority (AFCA). On the calculator: "it would be unfair for an insurer to be held liable for any shortfall in estimations". On the owner's point that the premium rose 19 per cent while the sum insured rose 10 per cent: "there is no requirement for an insurer to adjust this value when increasing its premiums". The owner got nothing towards the gap.

The same mechanism sits in a commercial building policy: the sum insured is your figure, and a shortfall in it can be yours.

No. A builder prices what it costs to stand a building up, but an insurance reinstatement valuation prices what it costs to rebuild the whole site after a total loss.

A builder's estimate against a 2026 on-site valuation, paid for by us as a one-off

A family-owned timber-processing business in regional Queensland asked us to confirm that insuring its buildings to a builder's rough estimate would keep it safe from underinsurance.

We commissioned an independent quantity surveyor, at no cost to the client. The valuer's figure came back about 2.8 times the builder's estimate.

The business had been insured at roughly 30% of its real rebuild cost, and the builder's estimate would only have lifted that to about 35%. The business has not had to claim.

The provider we use measures your building from the outside, using publicly available aerial and street-level imagery. It reads the footprint, the number of levels, the roof, the construction type, the age, and the standard of the finishes.

On a residential landlord policy, the complaints authority held that insuring the property adequately was the owner's job, because they "could have arranged an assessment of the property".

Imagery cannot show everything: the mezzanine that went in, the switchboard upgrade, the fit-out the last tenant left behind, the wall that is block and not tilt panel. Tell us what the imagery missed, and we can have your desktop building replacement estimate updated.

If the figure comes back above your sum insured, we can give you prices at more than one sum insured, so you choose how fast to close the gap. A higher excess that keeps full cover affordable is one way to do it.

Any commercial building owner, whether you hold a policy yet or not.

If you are buying, your lender will usually want a certificate of currency before settlement. That is the insurer's confirmation that cover is in place, and it needs to show the sum insured the lender asked for.

If the price brought you here, we can look at it beside the rebuild figure and show you your options. A cheaper quote on a short sum insured can cost you far more when you claim.

Some tenants who pay the premium through the outgoings ask for the building to be insured for less, and the shortfall at claim time would be yours.

On the policies we place, your sum insured is tested as it stood at the start of the policy year. You do not need to wait until renewal to raise a shortfall. The insurer sets any extra premium, a minimum premium may apply, and you decide whether to go ahead.

See how far building costs have risen since your number was set.

We can also arrange an on-site valuation instead of a desktop building replacement estimate, but that's a service you pay for.

The estimate helps us advise you on your sum insured. If you would like to see the calculation, ask us. We can go through the assumptions and any details the imagery may have missed.