# S-P08-H-03: Building costs have gone up since we last insured our house. Should we increase our sum insured? Collected 11 October 2026 [Home and contents insurance study](https://nzbrands.ai/research/insurance/home-contents-insurance) ## ChatGPT Answer ID: 28835a7f-8c5c-4989-aa78-38c7ec814a74 Yes, it would be wise to review your sum insured if building costs have increased since you last set it — and you may need to increase it. In New Zealand, your home sum insured is generally meant to reflect the estimated cost to rebuild your home (not its market value or the land value), and you are responsible for making sure it remains adequate. [ICNZ | Insurance Council of New Zealand](https://www.icnz.org.nz/individuals/house-contents/?utm_source=chatgpt.com) A few things to check: - **Compare your current sum insured with today’s rebuild estimate.** Rising labour, materials, demolition, consent, and professional costs can mean your old figure is no longer enough. [NZI Site](https://www.nzi.co.nz/personal-cover/home-insurance/home-sum-insured?utm_source=chatgpt.com) - **Consider changes you’ve made to the property**, such as renovations, extensions, new decks, solar panels, retaining walls, pools, or upgraded finishes. These may not be captured by an automatic annual adjustment from your insurer. [ICNZ | Insurance Council of New Zealand](https://www.icnz.org.nz/individuals/house-contents/?utm_source=chatgpt.com) - **Don’t use the house’s market value as the guide.** A rebuild sum insured is about replacing the structure and related costs, not what the property could sell for. [Tower Insurance NZ](https://www.tower.co.nz/house-insurance/sum-insured/?utm_source=chatgpt.com) - **Use your insurer’s calculator or get a professional estimate** if you’re unsure. For larger, unusual, high-value, or architecturally designed homes, a registered valuer or quantity surveyor may give a more accurate rebuild estimate. [BNZ](https://www.bnz.co.nz/support/insurance/general-insurance/understanding-your-sum-insured?utm_source=chatgpt.com) A practical approach: 1. Check your latest policy schedule and current sum insured. 2. Run a current rebuild estimate using your insurer’s recommended tool. 3. Increase the sum insured if the estimate is higher or if your home has changed. 4. Review it again at each renewal and after major renovations. [ICNZ | Insurance Council of New Zealand](https://www.icnz.org.nz/individuals/house-contents/?utm_source=chatgpt.com) If you tell me **when you last set the sum insured, the current amount, approximate house size, and whether you’ve renovated**, I can help you think through whether it is likely to be out of date. ## Gemini Answer ID: 5ea995ab-d24b-4092-82d7-d5a5daa83eee Yes, if building costs have risen since you last set your policy, **you should seriously consider increasing your sum insured.** Most home insurance policies in New Zealand operate on a **Sum Insured** basis. This means your insurer will only pay up to the specific maximum dollar amount listed on your policy if your home is destroyed. If your sum insured is lower than the actual cost to rebuild, you will have to cover the financial shortfall out of your own pocket. ### Why Building Costs Keep Rising Residential construction costs in New Zealand have faced persistent upward pressure due to increases in the price of building materials, labour shortages, and regulatory or compliance fees. According to the Cordell Construction Cost Index (CCCI), building costs continue to trend upward, meaning a house that cost a certain amount to rebuild a few years ago will almost certainly cost significantly more today. ### Key Factors to Keep in Mind * **Rebuild Cost vs. Market Value:** Your sum insured should reflect what it costs to clear the site, buy materials, pay builders, and secure council consents today. **Do not use your property's market value or council CV/RV**, as those include land value (which doesn't burn down or need rebuilding). * **Hidden Costs Included:** A proper sum insured calculation must factor in demolition, debris removal, scaffolding, architectural or engineering fees, and Goods and Services Tax (GST). * **Recent Renovations:** If you have added a deck, upgraded a kitchen, or extended your floor area since your last policy review, your existing sum insured will automatically be too low. --- ### Recommended Action Plan 1. **Calculate your current rebuild estimate:** Use an independent online tool like the **Cordell Sum Sure calculator** (available via major New Zealand insurers like AMI, Vero, and AMP) by entering your property address and checking its physical specs. Alternatively, for high-value, complex, or architecturally unique homes, engage a registered quantity surveyor or property valuer. 2. **Check for "SumExtra" protections:** Many New Zealand insurers offer an extra buffer or safety net policy add-on (such as Vero's or AMP's *SumExtra*) if you use an approved calculator like Cordell to accurately set your baseline figure. 3. **Contact your insurer before renewal:** Review your policy schedule ahead of your annual renewal date, update your figure to match current construction realities, and ensure you are not left underinsured when disaster strikes. When was the last time you reviewed or updated your home's sum insured figure? ## AI Overviews Answer ID: 828079e1-15c5-433b-bbd0-070becf3dde9 **Yes, you should review and most likely increase your sum insured.** In New Zealand, almost all home insurance policies operate on a "sum insured" basis, meaning the insurer will only pay up to the specific dollar cap you agreed upon if your home is destroyed. Because residential rebuild costs in New Zealand have surged dramatically over recent years (surging roughly 44% between 2020 and 2026), a sum insured set even a few years ago will leave you severely underinsured today. If your cap is too low, you will have to pay the shortfall out of your own pocket to finish rebuilding. How to Calculate Your New Sum Insured Do not base your figure on your home’s **market value** , purchase price, or council rateable value (RV)—none of these reflect actual building costs. Instead, your new figure needs to cover the cost of completely starting over at today's rates. * **Use an Online Calculator:** Most major Kiwi insurers provide access to the independent Cordell Sum Sure Calculator or Cotality Sum Sure. These tools use council data and current localized material and labor rates to generate a rebuild estimate. * **Hire a Professional:** If your home is architecturally unique, built on a steep slope, has premium finishes, or a total rebuild value estimated over $2.5 million, you should hire a **registered valuer** or **quantity surveyor** for an exact insurance valuation. What Your Figure Must Include When finalizing your amount, ensure it accounts for: * **The Structure:** Current New Zealand building costs average roughly **$4,000 per m²** for standard modern homes, but can quickly range from $4,800 to over $6,200 per m² depending on design complexity and site requirements. * **Site and Demolition Fees:** You must include the cost of clearing the site, safe debris removal, and demolition, which can add tens of thousands of dollars before construction even begins. * **Compliance & Professional Fees:** Factor in architect fees, structural engineer costs, and local council building consents. * **Other Special Features:** Remember to add the value of driveways, fencing, retaining walls, decks, or swimming pools. * **GST & Inflation Buffers:** Ensure the total figure **includes GST**. It is also wise to add a **10% to 15% inflation buffer** to protect against material cost spikes during the months it takes to clear and rebuild a home. _Note: Some insurers automatically adjust your sum insured for inflation at your annual renewal, but these are broad adjustments and rarely account for custom home renovations or precise local construction market spikes. Always double-check their math._ To help narrow down the best approach, could you share: * Roughly **when you last updated** the sum insured? * If you have done any **renovations or additions** recently? * Whether your home has any **complex site features** (like a steep slope or large retaining walls)? ## Google AI Mode Answer ID: ec7d854c-abb0-4330-963a-23bdec98e804 **Yes, you should strongly consider increasing your sum insured.** If building costs, materials, and labor rates have risen since your last policy update, your current sum insured may no longer cover the total cost to completely rebuild your home from scratch in a worst-case scenario. Underinsurance is a major risk in New Zealand, meaning if your limit is too low, you would have to pay any rebuilding shortfall out of your own pocket. Why Rebuild Costs Matter More Than Ever * * **Inflation and Supply Chain:** The actual cost to rebuild a home (incorporating materials, compliance, council consents, and trade labor) often rises faster than general consumer inflation. * **The "Sum Insured" Cap:** Most New Zealand home policies operate on a "sum insured" basis—meaning the absolute maximum your insurer will pay out is the figure stated on your policy. * **Natural Hazards Cover (Toka Tū Ake):** While the government-backed Natural Hazards Commission Toka Tū Ake (formerly EQC) provides a first-loss natural disaster cap (up to $ 300 , 000 plus GST), any costs beyond that fallback strictly onto your private insurance sum insured—and anything past that is your responsibility. [Smiths Insurance and KiwiSaver] * Recommended Steps to Take 1. **Use a Rebuild Calculator:** Most major NZ banks and insurers provide access to standardized cost calculators (such as the Cordell Sum Sure / Cotality calculator). You can input your property's specific size, materials, and features to get a modern estimate. For instance, you can look at tools provided via Westpac Home Rebuild Calculator or AMP Home Insurance Calculator. 2. **Account for All Costs:** Ensure your calculation includes demolition, debris removal, scaffolding, architectural and engineering fees, and council consent costs, not just the physical framing and roof. 3. **Review Annually:** Revisit your policy details every year at renewal time to keep pace with inflation. [AMP New Zealand] 4. **Consult Professionals:** If your property is architecturally unique, high-value (exceeding standard calculator thresholds like $ 2.5 million), or a complex heritage home, consider getting an independent professional registered valuer or quantity surveyor to assess the rebuild cost. [AMP New Zealand] If you'd like, let me know: * Roughly **when** you last updated your sum insured * The **approximate floor area** or construction type of your home I can help give you a better idea of how local building inflation impacts your specific situation.