Insurers have defended online home and contents value calculators after a Choice study produced varying replacement cost estimates.

The consumer group’s test of calculators offered on six insurers’ websites found differences of up to $71,500 for an identical four-bedroom house in a single postcode.

But an Insurance Council of Australia spokesman told insuranceNEWS.com.au that home building and contents calculators “are an important resource to help prevent or reduce underinsurance in the community”.

“Consumers are being helped, rather than misled, by online calculators. They provide reliable guidance on the amount of insurance householders may choose to purchase. Consumers may also use them to check their level of cover.”

As for the $71,500 discrepancy highlighted by Choice, ICA says the different outcomes are caused by insurers having individual underwriting methodologies and other criteria for assessing risk.

Calculators have been customised and may not include factors such as demolition cost, professional fees and other expenses likely to be incurred during a rebuild, and these could have a huge impact on the estimates.

IAG says its calculator “is designed to highlight to a customer what they need to consider when calculating their sum insured”.

“Variations in quality, construction materials, site differences, additions and extensions are just some of the factors that will influence the rebuilding cost,” a spokesman told insuranceNEWS.com.au.

“Online calculators play an important role in addressing underinsurance and helping consumers make sure they are adequately insured. 

“However, it’s important to recognise they provide general information only and are not a substitute for professional advice about a customer’s individual circumstances.”

Suncorp says its online calculator uses “extensive building industry data to estimate rebuilding costs, including demolition and professional fees”. 

“It is an important tool for customers to ensure they have the right level of cover to rebuild their home,” a spokesman told insuranceNEWS.com.au.