What does underinsurance mean?

Underinsurance occurs when the sum insured on your insurance policy — that is, the amount listed as the maximum we’ll pay out if you make a claim — isn’t enough to cover the full cost of rebuilding, repairing or replacing your home and its contents.

If you’re an Aussie homeowner, you may not have enough insurance to cover you in a disaster. There is research from MCG Quantity Surveyors which says that 66% of homes are underinsured. 

How you may be at risk of being underinsured

It can be hard to know whether you’re underinsured — many homeowners don’t know the true value of their home. Here are some ways you can wind up underinsured:

  • Miscalculating the value of your home and contents.
  • Not accounting for things like the cost of removing debris after an incident.
  • Lowering your premiums without careful consideration.
  • Increased repair costs due to inflation.
  • Spikes in repair costs thanks to materials increasing in price or high demand for construction services after a major event.

Inflation and sudden price spikes may seem out of your control, but there are ways to minimise their financial risk. GIO Home Insurance comes with Safety Net Home Protection, so that if building prices surge, you’ll have an added financial buffer. Under Safety Net Home Protection, we’ll cover you with an additional payment on top of your sum insured if the cost of repair or replacement exceeds your home sum insured.

How much we pay will depend on your level of cover. Safety Net Home Protection is automatically included with:

  • Classic Extras policies, for up to a further 25% of your sum insured.
  • Platinum policies, for up to a further 30% of your sum insured.

If you hold a GIO Classic Home Insurance policy, you can add Safety Net Home Protection as an optional cover for a small additional premium. We’ll then cover up to a further 25% of your sum insured.

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How to avoid underinsurance

Research your policy

Not all insurers have the same idea about maximum limits and what counts as your contents — for example, wheelchairs are sometimes excluded. So it’s crucial to read the fine print.

GIO does, however, cover wheelchairs and other items that are classified as vehicles, watercraft or aircraft pieces. This includes mobility scooters, golf carts, surfboards, kayaks, toy planes and more.

For specific info about what GIO does and does not cover, refer to our PDS.

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Review your policy

Certain renovations may increase the value of your home, and how much it would cost to rebuild — so if you don’t adjust your sum insured accordingly, you could be left underinsured, especially if it’s been a while since you purchased your policy. If you do anything to your home that could affect the sum insured you need, let your insurer know.

Spending more on premiums right now might feel like a pain. But it may be worth it to avoid getting stuck with hefty out of pocket costs at claims time. According to best practice, at least 90% of your rebuilding costs should be covered by your insurance policy.

If you are getting work done, remember that GIO doesn’t cover loss or damage caused by building alterations. The same goes for any loss or damage that occurs during the renovation process. Ensure that your builder has the appropriate insurance before work begins.  


Use calculators

Remember, the price you paid for something isn’t necessarily the same as the cost of replacing it. Try our Building Calculator to help you estimate your sum insured.

If you’re still in doubt, speak to a licensed builder or professional.

And remember, your home is likely the most valuable asset you’ll ever own. Therefore, it’s the most important asset to properly insure, especially considering how common storms, fires and floods are in certain parts of our country.


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Insurance issued by AAI Limited ABN 48 005 297 807 trading as GIO. Consider the Product Disclosure Statement before buying this insurance.This advice has been prepared without taking into account your particular objectives, financial situations or needs, so you should consider whether it is appropriate for you before acting on it. The Target Market Determination is also available.

The information is intended to be of general nature only. Subject to any rights you may have under any law, we do not accept any legal responsibility for any loss or damage, including loss of business or profits or any other indirect loss, incurred as a result of reliance upon the information. Please make your own enquiries.