Is Your Rental Actually Insured for What It Would Cost to Rebuild?
Most landlords check one thing when their insurance renews: whether the premium went up. Almost nobody checks whether the sum insured still covers the actual cost of rebuilding the property today. That gap is more common than most owners realise.
The Numbers Are Bigger Than You'd Think
APRA's own 2026 climate vulnerability assessment estimates that around one in seven Australian households are currently uninsured, with that figure projected to worsen over time as premiums continue rising faster than incomes. Home insurance premiums have climbed sharply in recent years — the average premium rose 51% between 2020 and October 2025, with a further increase recorded across 2025 alone.
That premium growth is being driven by two things at once: more frequent and severe weather events pushing claims costs up and rising construction costs increasing what it actually costs to rebuild a home after a loss. Both pressures point the same direction toward policies that haven't been reviewed, falling further behind reality.
Why the Gap Keeps Growing
According to quantity surveying firm MCG, many homeowners simply don't know what it would actually cost to rebuild their property today: demolition, compliance with updated building codes, and professional fees all add to the real number, and without a proper replacement cost assessment, owners are effectively guessing.
It's rarely one bad decision that causes underinsurance; it tends to build quietly: a renovation here, a premium-saving decision there, a contents estimate that never got revisited, until the policy looks fine right up until the day it's actually needed.
What This Means Specifically for Landlords
If your rental is in a strata title building, it's worth knowing the building itself may be covered through strata insurance, but owners can still be exposed through inadequate common property cover, special levies after a major claim, poor loss-of-rent cover, or insufficient contents and landlord protection inside their own lot.
Property investors should specifically review building cover, landlord cover, rent default terms, malicious damage cover, legal liability, and cover for periods where the property can't be tenanted. All of which matter more for an investment property than for an owner-occupied home, since a gap here doesn't just cost you a rebuild, it costs you rental income on top.
Why This Isn't Just a "Set and Forget" Policy
As building costs continue rising even in periods where property values soften, the risk of underinsurance can actually grow rather than shrink, which means a falling market is exactly the moment owners are most likely to assume their cover is "probably fine," when the opposite may be true.
What Landlords Should Actually Do
- Check when your sum insured was last reviewed and if it's been more than 2–3 years, construction cost inflation alone likely means it's outdated
- Ask specifically about rent default and loss-of-rent cover, not just building cover
- If your property is strata-titled, confirm what's covered by the body corporate and what falls to you personally
- Don't assume a lower premium means better value and compare cost per dollar of actual protection, not the headline number
How Perth Rental Specialists Helps
We already help our landlords understand what cover they need (building, contents, and landlord protection), but the sum insured itself is worth revisiting on your own terms, especially if it's been a few years. If you're not sure where to start, that's exactly the kind of conversation we're happy to have.
Get in touch with Elyse on 0460 342 026.