The Insurance Council of Australia has launched a website to educate consumers and combat underinsurance.

About 23% of homeowners and renters have no cover and 80% are underinsured for home and contents, CEO Rob Whelan told the launch event in Sydney last week.

Two-thirds of Australia’s 2 million renters have no home and contents cover, he says, citing a study by research house Quantum.

The findings are “disturbing”, Mr Whelan says.

“It is a concern that renters don’t necessarily consider that their contents should be insured, because when something happens it can be a catastrophic loss,” he told insuranceNEWS.com.au.

“Most people don’t realise they are underinsured until it’s too late.”

NSW Police and Emergency Services Minister Michael Gallacher, who attended the launch, says the trends are “very worrying” and correlate with data from emergency services.

Mr Whelan says he hopes the Understand Insurance website, which is configured for use on mobile devices and links with social media tools, will reach this market segment.

One-third of the 900 consumers surveyed by Quantum do not update their policies every year.

Most choose insurance on price and do not understand how it works. One in four are unsure what is covered by home and contents policies and 48% do not consider exclusions when selecting cover.

The Understand Insurance site, providing tools, calculators and case studies, is a response to consumer information gaps identified after the 2011 natural disasters.

National Insurance Brokers Association CEO Dallas Booth says underinsurance was a significant problem in the Blue Mountains during the recent bushfires.

New building requirements in fire-prone areas mean the cost of replacing a home has blown out by up to $100,000 since 2010, he says.

“I’m not sure if the community understands that the cost to rebuild may well be significantly more than they thought,” he told insuranceNEWS.com.au.

“That was certainly an issue in the community forum at Springwood in the Blue Mountains that I attended. People were not aware that building standards had changed in 2010.”