Now is the perfect time to think carefully about your Sums Insured. The recent unfortunate and devastating bushfires and storms across Australia has highlighted a huge problem with underinsurance, particularly for home, contents, commercial property and business insurance policies.

What is your “Sum Insured?”   This will represent the maximum amount your insurance company will pay. If you are underinsured, you can be penalized in the event of a claim – and then in reality, you have then paid for an insurance policy that doesn’t cover the full cost of replacing your property/assets. This can lead to a large financial impact on you, your family or your business.

Factors that also contribute to being underinsured:

  • Knowingly electing a smaller Sums Insured. Whilst this does decrease the premium you pay each year, it can mean, in the event of a loss, that you will be underinsured.
  • A gradual accumulation of possessions. This is why it’s important to review your assets and / or contents each year as you buy more things.
  • Not accounting for upgraded assets. As we tend to replace with better quality and more expensive items, we need to make sure the level of insurance cover reflects the new replacement value.
  • Financial prioritization. Choosing a premium you want to pay vs. insuring your assets or property for the full replacement value.
  • Increased building/repair costs.  These costs increase every year, sometimes due to the fact that the items we buy become more complex with technology.   For example – Cars are more expensive to fix these days, and the cost of building materials is on the rise.
    This combined with the added pressure that a major event (storm/fire/flood) ads to the building/repair industries as resources and labor becomes scarce which in turn pushes up the cost to rebuild further.
If you wish to discuss and review your Sums Insured with your Adviser, please contact Citycover on
(07) 3270 1500.