Work out the right building sum insured for your home. Learn rebuild costs, avoid underinsurance, and use Naked’s building calculator.
Most people choose their building sum insured when they take out the policy, often using what they paid for the home as a guide. Then they never really think about it again. Which is understandable, until they need to claim.
Your building sum insured is the amount it would cost to rebuild your home if it were seriously damaged or destroyed. That’s not always the same as what you paid for the home, or what you could sell it for today. It’s about what it would cost to rebuild the actual structure, with today’s labour and material costs.
And that number matters more than most people realise.
For example, if your home would cost R2 million to rebuild, but you've insured it for R1.6 million, it’s insured for 80% of what it should be. So if you claim, the payout may also be reduced to 80%, even if the claim itself is valid.
Our building sum insured calculator gives you a practical starting point. This guide helps you understand what goes into that number, what people often forget to include, and how to sense-check the result before you buy cover.
What we will cover
What's the difference between market value and rebuild cost?
This is where a lot of people get caught out.
Market value is what someone might pay to buy your home. That can be influenced by all kinds of things: the suburb, nearby schools, traffic, safety, what other homes around you are selling for, and how convenient the area is for everyday life.
Your building sum insured is different. It’s about what it would cost today to rebuild your home if it were badly damaged or destroyed.
That includes materials, labour, demolition, rubble removal, professional fees, and council approvals.
Sometimes these two values might be very similar, but they’re not the same thing. If you use what your home could sell for as a shortcut, you could end up with too little building cover or paying for more than you actually need. Underinsurance is more common than many people realise, especially when rebuild costs haven’t been updated in years.
Read more about why it’s important to insure your home contents for the right value .
Your estimate needs to include more than the house
Underinsurance usually doesn't happen because of one massive mistake. It's normally a few smaller things people forget to include.
The main structure
Start with the basics: the size of the home, number of storeys, roof type, construction type, and quality of your finishes, for example, basic tiles vs. imported tiles or simple light fittings vs. designer lighting.
Two homes with the same floor area can have completely different rebuild costs depending on the finishes and complexity of the build.
Fixtures and finishes
Built-in cupboards, bathroom fittings, kitchen finishes, flooring, fitted appliances, light fittings, fixed mirrors, and anything permanently attached to the home.
These things add up quickly, especially in kitchens and bathrooms.
Outside structures
Driveways, paving, walls, gates, retaining walls, pools, water features, and anything else permanently fixed to the property.
People often focus on the house itself and forget how expensive the outside structures can be to replace.
Demolition and site prep
Rebuilding doesn't start with new bricks going up. First, the damaged structure usually needs to be demolished and cleared safely.
Those costs form part of the rebuild too.
Professional fees
Architects, engineers, surveyors, and council approvals all come with costs. They're not the exciting part of rebuilding, but they're still part of the process.
Outbuildings and extras
Garages, staff quarters, storage rooms, water tanks, and permanently installed systems should all be included too.
One extra item might not make a huge difference on its own. But together, they can move the number quite a bit.
Don’t forget fixed systems like geysers and solar
This catches a lot of people off guard.
Fixed electric, gas, and solar geysers should be included in your building value. But including them in the value doesn't automatically mean they're covered for every type of damage.
At Naked, cover for the geyser itself, which means fixing or replacing it if it bursts or starts leaking, is an optional boost.
And for solar setups, that boost only covers the water-storage part of a solar geyser system, not the panels or inverter.
So include these items in your building value, but make sure you also understand what your policy actually covers.
Next step: Turn the “what” into a realistic cost
Knowing what to include is one thing. Working out what it would all cost is the tricky bit.
Most people don’t know the current rebuild cost per square metre. Or what it would cost to replace a boundary wall, clear a damaged site, rebuild a pool, redo paving, or put back the same level of finishes.
That’s where the Naked building calculator comes in.
It helps you turn the details of your home into a more realistic rebuild estimate, without needing to become a quantity surveyor overnight.
Use the Naked building calculator to build up your estimate
You don't need to become a quantity surveyor overnight. You just need a reasonably accurate understanding of your home.
Start with the size
Square metres make a big difference to rebuild cost, so use the most accurate figure you can find.
Guessing low might reduce the estimate, but it also reduces your cover.
Be honest about your finishes
Standard finishes are practical, good-quality materials. Think ceramic tiles, melamine or standard kitchen cupboards, laminate countertops, standard bathroom fittings, basic built-in cupboards, simple light fittings, and painted walls.
Above average might include things like stone countertops, upgraded tiles, better cabinetry, frameless showers, feature lighting, higher-quality flooring, aluminium shutters, fitted shelving, or a more expensive kitchen and bathroom design.
High-end usually means premium materials and more specialised work. This could include bespoke kitchens, marble or engineered stone surfaces, imported tiles, hardwood flooring, custom cabinetry, large glazing features, designer lighting, smart-home systems, underfloor heating, high-end bathroom fittings, or architectural details that would be expensive to rebuild properly.
You're not judging your taste here. You're trying to reflect what it would genuinely cost to rebuild your home properly.
Check the extras carefully, they’re easy to underestimate
Pools, paving, walls, solar, water tanks, and outbuildings are often where people underestimate the most.
The calculator works best when the details are accurate.
Use the breakdown as a sense-check
The calculator doesn't just spit out one number. It shows how that number is built up.
If the total feels too low, it's worth checking what's missing before assuming you've found a bargain.
If you live in a complex, check what the body corporate covers
Your body corporate usually insures the building itself, but that doesn't automatically mean upgrades inside your unit are fully covered.
If you've renovated your kitchen, upgraded finishes, or added built-ins, it's worth asking your managing agent whether those improvements are reflected in the insured value for your unit.
You should also check when the replacement values for the complex were last updated. Ideally, this should happen every few years.
How often should I update my building sum insured?
At least once a year is a good habit.
You should also update it whenever you renovate, add new structures, install solar, build a pool, or make any other changes that would affect rebuild cost.
Naked applies an annual inflation-linked increase, but that's still not a substitute for checking whether the number actually reflects your home today.
Building costs change. Homes change too.
The short version: insure for what it would cost to rebuild
Your building sum insured should reflect what it would cost to rebuild your home, not what it would sell for.
That means thinking beyond the walls and roof. Finishes, outside structures, outbuildings, demolition costs, and professional fees all matter too.
Use the building calculator as a solid starting point, sense-check the result against your actual property, and revisit it when things change. And once you’ve worked out a realistic rebuild value, you can get a quote for Naked building insurance online in minutes.
Ready to insure your home properly?
Once you’ve worked out a realistic rebuild value, you can get a quote for Naked building insurance online in minutes.
Building insurance covers the permanent structures on your property, including your home, garages, walls, paving, and other fixed features, against events like fire, storms, burst geysers, and more.
