What would it really cost to rebuild your building today?

• Nobody is coming to check your sum insured for you.
• When valuers measure it, the average building is about 24% short, and industrial property 31%.
• On several of the wordings we place, insuring at the full valuation figure takes the underinsurance penalty off your policy.
• We commission your desktop valuation at no cost to you, at new business and every renewal.

What it is: a registered valuer's desktop assessment of what it would cost to rebuild your building, commissioned by us at no cost to you, to inform the advice we give you.

What it is not: it is not a site visit, and it is not what the property would sell for or what an agent would appraise it at.

Underinsurance means your building is insured for less than it costs to rebuild. Valuers measure the average building at about 24% short, and industrial property 31% (MCG Quantity Surveyors).

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. The co-insurance clause, also called an average clause, applies. Most commercial policies test your sum insured against at least 80% of the true rebuild value, and some set the bar a little higher. This building needed $1.76 million and carried $1.5 million. So the payout is scaled to roughly 85% of the claim: about $255,000. The owner finds the other $45,000.

A total loss. The building is destroyed. The insurer pays the full $1.5 million, with no scaling. But the rebuild costs $2.2 million. The owner is $700,000 short, on a cleared block.

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

On several of the wordings we place, yes. Insure for the full figure in a current valuation from an approved valuer, and the underinsurance penalty clause is switched off. Holding a valuation is not enough: your sum insured must be its full figure.

An approved valuer is a certified practising valuer registered with the Australian Property Institute, not an agent's appraisal or an online estimate. Our desktop valuation is prepared to that standard.

The valuation must stay current: in practice a full valuation on up to a roughly three-year cycle, with an approved-valuer update inside the last 12 months. Our valuation at every renewal keeps it current.

Two honest limits. It is a feature of several of the wordings we place, not all of them, and not every direct product. We describe what the wording says, not a claims outcome we have watched. Where the clause stays on, an accurate valuation still makes it harmless. For the rest of your cover, see Commercial Building Insurance.

Some brokers set your sum insured with an online calculator. It is fast, but it works off broad averages. It misses demolition and clearing on your site, professional and council fees, code upgrades, and how building prices have moved. A figure that looks fine can still fail the 80% test when you claim. And a calculator figure does not unlock the escape clause above.

The insurer's calculator, and a total loss

In a published determination, an owner trusted the insurer's own calculator and insured their building for $495,000. A fire made it a total loss, and the claim was lodged on 04/03/2024. The insurer's two builder quotes came back at $637,659 and $656,674. It paid the sum insured plus the policy's additional benefits, and no more.

The owner went to the Australian Financial Complaints Authority, the free service that settles insurance disputes without going to court. Both arguments about the number failed. On the calculator: "it would be unfair for an insurer to be held liable for any shortfall in estimations". On the premium rising 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 $2,000 for the way the claim was handled, and nothing towards the gap.

That was a home policy, and the determination decides nothing about commercial cover. Our point, not the determination's: the same mechanism sits in a commercial building policy.

No, and this is one of the most common and most expensive mistakes we see.

A 2026 on-site valuation, commissioned and paid for by CIB as a one-off

A family-owned timber-processing business in regional Queensland came to us holding a builder's rough estimate for its buildings, and asked us to confirm that insuring to that figure would keep them safe from underinsurance. That is the moment an order-taking broker says "sure, sign here." We did not.

A builder prices what it costs to stand a building up. An insurance reinstatement valuation prices what it costs to rebuild the whole site after a total loss, including the things a builder's quote leaves out. So we commissioned an independent quantity surveyor, at no cost to the client, to measure it properly. The gap in the valuer's assessment was about 2.8 times, and here is where it came from:

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%. Its previous broker had simply accepted the declared value. We held our position, explained why the two numbers were so far apart rather than just quoting the big one, and are now helping the owners brief the valuer so the final figure is accurate and defensible. The builder's own note called it a "rough estimate", not a quote anyone intended to build from. That is a useful cross-check, but it is not a rebuild figure, and declaring to it locks in the underinsurance.

No claim has happened here. This is the advice working the way it should, catching a gap before it becomes a disaster.

Nobody is coming to check your sum insured for you. Not the insurer, and not the ombudsman.

A sum insured nobody measured

In a published determination, a landlord's rented property burnt down in July 2021. In the six years before, the owner cut its sum insured three times, from $250,000 to $185,400, to hold the premium down. Nobody had assessed its rebuild cost. The insurer paid the sum insured, $3,245 under the inflation provision and $16,900 for lost rent. A request for $131,355 more got nothing toward the shortfall.

The Australian Financial Complaints Authority held that the onus of adequately insuring it sat with the owner, not the insurer. "at any time during the period of insurance, the complainant could have arranged an assessment of the property to ascertain an approximate rebuild cost, but this was not done."

That was a residential landlord policy. Our point, not the determination's: on a total loss, your sum insured caps the rebuild under a commercial building policy too.

So we take that job off you, and you do not pay for the report.

1. We collect your building details: construction type, floor area, fit-out and external improvements.
2. A registered valuer prepares the desktop assessment to the approved-valuer standard.
3. It prices the full rebuild: demolition, debris removal, professional fees, council approvals, code upgrades and inflation.
4. You review it with us in plain language. No jargon, no pressure.
5. Your policy moves to the real number, repeated at every renewal.

If the figure comes back higher, which it often does, we close the gap at a pace you can manage, including with a higher excess that keeps full cover affordable.

Want a sense of the drift first? Look up how far building costs have risen since your number was set.

For us, as your broker, to inform our advice. Need an independent valuation for a lender, a sale or your records? Tell us and we will point you the right way.

Not a number in an email. A registered valuer's desktop assessment that shows its working, which is why it holds up where a guess does not.

Insure for the truth.