Check whether your commercial building is underinsured

If the figure has never been measured, you may only find out it is short when you claim. The assessor works out what a rebuild costs, and the number on the policy can turn out to have been set years earlier and nudged along at each renewal since.

A short figure costs you on a partial loss and on a total loss, and the two work differently. On a partial loss, the business packs we place can cut your payout once the figure they test falls below 80 per cent of the building's full rebuild cost. Some test your sum insured itself, and some a limit set 20 per cent above it, so the figure can fall further before the cut starts.

The test is taken across everything insured at the premises, so a short building figure can reduce a claim on your contents or stock as well. On the business packs we arrange, the clause leaves a small loss alone, and how small differs between policies. A larger loss gets no such protection.

Which test your policy uses changes what a gap costs you. So do the figure you insure for and the excess you carry, and both of those are your choice.

On a total loss, most of the business packs we place pay up to 20 per cent above the amount you insured the building for. Whatever the rebuild costs beyond that is yours to fund. The formula and a worked case are in The Co-Insurance Clause: What Every Building Owner Must Know.

The checker below reads your answers for the signs of an out-of-date figure. Putting a number on the rebuild is what a desktop building replacement estimate is for.

If you are buying and a lender is involved, it will want a certificate showing the sum insured it asked for. Sometimes that figure is more than the building would cost to rebuild. We can give you the rebuild figure in writing. What you agree with your lender is between you and the bank. What owners do next is in what a bank requires before it settles a commercial property loan.

If your building is a commercial strata unit, the cut on a partial claim probably does not reach you. The commercial strata wordings we place do not scale a partial claim down in proportion. Some set an 80 per cent condition inside an optional catastrophe cover, which pays the extra rebuild cost after a declared catastrophe. Your schedule shows whether you hold it. Your scheme may be insured on a different wording. You still pay for a short figure: the loss is paid up to the sum insured, and the body corporate funds any shortfall by levy on the lot owners. See commercial strata insurance for how the scheme's cover works.

When it was last professionally valued. This carries the most weight in the checker. A valuation measures the building. Everything else on a renewal notice adjusts a number somebody set once.

For an ordinary commercial building, no rule makes you have it revalued, so the figure can sit untouched for years.

Whether the sum insured has been measured or just nudged. A figure that rises a little each year looks like it is keeping up. Indexation moves the figure you already have, error included, so it is only as good as the figure it started from.

How long you have held it. Time turns a small gap into a large one, because rebuild costs move and an unmeasured figure does not keep pace with them. Non-residential building construction prices across Australia rose 4.4 per cent in the year to June 2026, on Australian Bureau of Statistics figures. A few years of rises like that, against a figure that has stood still, can open a wide gap.

What kind of building it is. Industrial and warehouse buildings show the widest measured gaps, so the checker weights them accordingly.

Whether the building has changed. A new mezzanine, an extension, a solar array, a change of use. Each one moves the rebuild cost, and the sum insured will not reflect it until somebody updates it with the insurer.

How far out are these figures in practice? Only about one in ten businesses think they are underinsured, on Insurance Council of Australia research. When MCG Quantity Surveyors valued buildings themselves, the sums insured came up about 24 per cent short on average, and 31 per cent short for industrial property. Most of the landlords we see with a short figure did not know what a rebuild would cost today. For how often to revalue, and what a rebuild figure has to include, see Underinsurance: The Biggest Risk to Commercial Building Owners.

An online rebuild calculator can leave you short. In one complaint about a home building policy, the owner had set the cover with the insurer's own online calculator, and builders' quotes came in well above it. The calculator's figure was found to be an estimate, not advice, so the shortfall stayed with the owner. The figure we arrange is made for your own building, and your broker uses it to advise you on the sum insured.

For a published percentage by year, see how far building costs have risen since the year your sum insured was last set.

The result rests on what you tell us, so it is only as good as your answers. That goes for a green result too.

Your broker will ask about the building's construction, floor area, fit-out and anything else that affects the rebuild cost. You do not have to move your insurance to us to discuss it.

What happens after that depends on the figure and on you. Your broker may tell you the sum insured already looks right. Where there is a gap, we can price your cover at more than one sum insured, including where a higher excess can make full cover affordable. Or we can show you the calculation so you can check the inputs. Nothing changes until you tell us.

If your renewal went up and nobody explained why, we can set the cover and the price side by side, so you can see whether a lower quote comes from a lower building figure. A fresh desktop building replacement estimate at each renewal is something we can arrange, so keeping the number current stops being something you have to remember.

If the full rebuild amount is difficult to afford, talk to us about the sum insured, excess and premium together. We explain what choosing a lower amount could leave you paying at claim time.

If you ever claim on a building we insure, a specialist claims manager on our team runs the claim with the insurer. The broker who looks after your policy stays involved throughout. For how the building cover, the rent and the owner's liability fit together, see commercial property insurance.