How do you work out the sum insured for your house?
General information, not advice on your situation. Buying through Tower's online quote is direct, without advice. QuoteHub is a Tower partner and Smiths Insurance & KiwiSaver may receive a commission from Tower.
Your sum insured is the most your insurer will pay to rebuild your house, so set it from rebuild cost, not from what the house would sell for. Tower counts demolition, debris removal, professional fees and council fees in that cost, and the Insurance Council of New Zealand (ICNZ) says working out the figure is the owner's job. The short method: measure the floor area, run a calculator, check it against a second method, then review it every year. This page is part of our house insurance guide.
What sum insured means, and what it leaves out
If the house is destroyed, your insurer pays up to the agreed figure and no more, even if rebuilding costs more. Setting it too high does not buy a bigger payout, because policies do not require insurers to pay more than the actual cost of rebuilding (ICNZ). It is not the market value, purchase price or rateable value (ICNZ), and it leaves out the value of the land (Tower).
The type of cover decides what "sum insured" means when you claim. ICNZ names three types (ICNZ):
| Type | How it pays |
|---|---|
| Fixed sum insured | Up to the figure you chose; the most common type |
| Present day value | What the house was worth just before the loss, without the land |
| Total replacement | Rebuilds up to the floor area insured |
Tower says some houses, generally pre-1950s ones not fully re-lined, re-wired or re-roofed, carry present day value cover. It invites owners who have finished those upgrades to ask whether it can offer full replacement cover (Tower).
A worksheet for your rebuild figure
Buying? Do this before settlement: see insurance on settlement day and first home buyer insurance.
- Measure the floor area. ICNZ says to measure the external perimeter of each floor, add covered decks and pergolas, and include the garage and outbuildings (ICNZ).
- Fill in the inputs table below, which draws on the factors Tower and ICNZ list (Tower, ICNZ), including the extras and costs a calculator can miss.
- Run an insurer's sum insured calculator, such as the Cordell Sum Sure calculator that Tower links to.
- Cross-check with a second method from the table below. ICNZ recommends using more than one because no single method will match the real cost exactly (ICNZ).
- Put the figure and the area on your policy and keep your working. ICNZ says some insurers pay more than the sum insured, up to a capped amount, if you can show you used their calculator or a qualified professional, so ask yours (ICNZ guide).
| Input | What to note |
|---|---|
| Floor area | External measurement of each floor, covered decks, garage and outbuildings |
| Construction | Build year, cladding, roof and number of levels |
| Design and finish | Villa, bungalow, contemporary or one-off design, and the quality of materials and fittings |
| Site and region | Land slope, access and geographical location |
| Fixed items | Stoves, heat pumps, fitted carpets and utility connections |
| Extras | Driveways, paths, fences, decks, pools, solar systems, outbuildings and retaining walls |
| Costs on top | Demolition, debris removal, professional and council fees, and compliance costs |
ICNZ lists four ways to get the dollar figure (ICNZ). Which suits you depends on the house.
| Method | Who does it | Suits |
|---|---|---|
| Online calculator | Insurer's tool, such as Cordell Sum Sure | A standard house; a quick starting figure |
| Rebuild estimate | Licensed builder | A house with finishes or features a calculator misses |
| Insurance valuation | Registered valuer | A second opinion on a typical house |
| Professional advice | Quantity surveyor | A high-value or unusual house |
This page gives no rate per square metre, because rebuild cost moves with every input above.
Worked example for the area step: ICNZ's example house measures 200 square metres on its external perimeter, but adding up the internal rooms can give 10 to 15% less, or 170 to 180 square metres (ICNZ). That leaves 20 to 30 square metres out. If the smaller area reaches your certificate, Tower's wording settles a claim for the least of the repair cost, the cost to replace the actual or certificate area (whichever is smaller), and the sum insured (Tower wording). So a short area can hurt twice: on the certificate and in any calculator result built from it.
What online calculators assume, and what they miss
Tower says its calculator shows what is on the public record about the house and gives a starting figure that already includes professional fees, demolition, debris removal and GST (Tower). It is only as good as that record: ICNZ says not to rely on a floor area from a third-party property website, because it can sometimes be wrong (ICNZ).
Extras are where gaps open. Under Tower's wording, permanent pools and spa pools, solar systems and tennis courts are covered only if specified on your certificate, and garden retaining walls are included up to $15,000, $25,000 or $50,000 in total for Standard, Plus and Premium (Standard wording, Plus wording, Premium wording). ICNZ says specifying retaining walls or recreational features raises the sum insured and the premium, and that some policies count fitted carpets as contents (ICNZ). Home and contents insurance, one policy or two covers that overlap.
Tower says a professional can help if the house is high value, unusual or not in the calculator, and asks that a rebuild insurance valuation include council fees, professional fees and demolition (Tower). Wordings also differ between insurers, and some have sub-limits or exclusions for certain features (ICNZ).
How natural hazards cover fits inside your sum insured
Natural hazards cover from the Natural Hazards Commission (NHC, formerly EQC) comes with a home policy that includes fire cover. Its levy is built into your premium, and NHC says the maximum levy is currently $480 plus GST a year (NHC).
| Layer | Who pays | Limit per natural hazard event |
|---|---|---|
| First | NHC, funded by the levy | Generally $300,000 plus GST (NHC) |
| Second | Your insurer | In Tower's wording, the difference between NHC's payment and your sum insured, less any excess (Tower wording) |
| Third | You | Generally anything above the sum insured, because the insurer pays no more even if rebuilding costs more (ICNZ) |
NHC says the most you can be paid is the amount in your private policy, so the sum insured is generally the ceiling for the building claim, NHC's share included, not an extra $300,000 on top. NHC adds that its cap can be lower if your replacement sum insured is below the standard amount (NHC). Natural disaster insurance in NZ explains the layers.
Keeping the figure right after you set it
Review it every year. Tower adjusts the sum insured before each renewal, using the Cordell Sum Sure calculator or the building components of the consumer price index, and says you still need to check it is enough to rebuild (Tower).
Update it when the house changes. ICNZ says to tell your insurer about improvements (ICNZ) and to update the area when you add a deck, garage or outbuilding (ICNZ), and Tower's wording requires you to tell it about structural alterations immediately (Tower wording). The building and renovating checklist covers the rest. Tower's house policies are designed for owner-occupiers (Tower), so if you start renting the house out, read landlord versus house insurance for a rental.
A claim can change the figure. After a partial loss, Tower's wording reduces the sum insured by the repair cost until the house is repaired, and cover is not restored after a total loss. If fire destroys a house that is uneconomic to repair and the replacement cost is above the sum insured, Tower pays up to a further 20% of the sum insured, but not for fire after a natural hazard (Tower wording). It is a backstop, not a reason to set the figure low.
Getting a quote from Tower online
Have the address, the year the house was built, what it is built of, the floor area and your sum insured figure to hand. QuoteHub's link opens Tower's online quote, where Tower prices the cover and issues the policy. Other insurers sell house cover too.
Questions people ask
What does sum insured mean in home insurance?
It is the most your insurer will pay to rebuild the house if it is damaged beyond repair. Tower counts demolition, debris removal, professional fees and council fees in that cost, and says it is not the market value, the price you paid or the land value (Tower).
Is there a formula for working out the sum insured?
No single formula applies. Tower lists floor area, materials, finish, slope and access among the inputs (Tower), and ICNZ suggests checking the result against a second method (ICNZ).
Does my sum insured need to match my mortgage?
It depends on your lender. Tower says a lender may require cover that matches or exceeds the loan (Tower), but ICNZ says the sum insured is set from rebuild cost, not market value (ICNZ). Mortgage protection covers you, not the building.
How can I estimate my home insurance cost in New Zealand?
This page sets the sum insured, not a price. Tower says its price includes a risk assessment for earthquake, flood, landslide and sea surge at your address, and that a higher excess or paying annually can lower it (Tower). How much house insurance costs in NZ explains each driver.
Adviser's view
QuoteHub's read: the sum insured is a rebuild figure that the owner is responsible for, so the floor area and extras you declare decide whether it is right.
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QuoteHub is a Tower partner. If you buy through this link, Smiths Insurance & KiwiSaver may receive a commission from Tower. Buying online is not financial advice.
Cite this page QuoteHub NZ (2026). House Sum Insured NZ: How to Work Out Yours. www.quotehub.co.nz/house-insurance/sum-insured-nz. Updated 2026-10-07.
References
- Tower: Calculating your sum insured
- Tower: House insurance
- Tower: House Standard wording 09-24
- Tower: House Plus wording 09-24
- Tower: House Premium wording 09-24
- NHC Toka Tū Ake: About natural hazards cover
- ICNZ: House and contents insurance
- ICNZ guide: Sum insured
- ICNZ guide: Area of a house for insurance
- ICNZ guide: Renovating a house
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