Is your home adequately insured for the current economic environment?

From persistent inflation to rising interest rates, we’re all aware that the economy is experiencing challenges, and Australians are feeling it. According to Ipsos (2026), cost of living is the single most critical issue facing Australians today, and has been since 2022. To manage, more Australians are cutting back on spending, like eating out, subscription services and concert tickets, and are delaying larger purchases, like cars and holidays (Nature, 2026). But while our attention is focused on managing the household finances, an overlooked concern is the rising cost of building supplies and whether your home is still adequately insured.

Why is the cost of building supplies rising?

There are a number of factors that have likely impacted it. Firstly, the cumulative impact of severe weather events across Australia has led to sustained, high demand for building materials like timber and steel, while also placing ongoing pressure on trade labour supply. Secondly, wars in Ukraine and the Middle East continue to disrupt global supply chains too, creating the perfect storm for a supply crisis – and a potential nightmare for homeowners that need to repair or rebuild their homes.

How the cost of building supplies impacts your home insurance

Building and contents insurance policies are there to help protect you in the event of loss or damage as a result of an insured event. But the Insurance Council of Australia (2026) estimate that construction costs have increased by up to 45% in parts of Australia in just 5 years, which means you could be unknowingly underinsured.

Most home insurance policies cover a policyholder up to a predetermined financial limit known as the sum insured. This represents the maximum amount that your insurer will pay in the event of a claim. Generally, this amount should represent the realistic replacement value of your current home.

However, with building supplies costs on the rise, home insurance policies could be set up with a sum insured that’s significantly lower than the real time costs of rebuilding in this challenging economy.

What happens if your home rebuild costs more than your sum insured?

If your sum insured falls short of the real cost of rebuilding after an insured event, you may have to make up the difference. With disposable income already in a pinch at the hands of rising prices, paying a large insurance shortfall is less than ideal. Luckily, you can review your policy and make sure that you’re adequately insured for today’s building prices.

See if your insurance measures up

Take this as a reminder to check your building insurance policy. Calculate how much it would roughly cost to rebuild your home and replace your belongings in today’s pricing using our handy calculators, and then see how your sum insured measures up.

Our team of insurance experts are also available to help you review your current policy and cover, if you need it. For more information call us on 1300 557 155 between 8am–8pm (AEST/AEDT) weekdays.