AAMI is offering all customers total replacement cover for their home building policies.

The move – which the insurer says has been introduced in a bid to curb Australia’s underinsurance problem – will see all AAMI policyholders covered for the complete replacement cost of their home if it is destroyed.

Even existing customers who are deemed underinsured will be totally covered.

AAMI Public Affairs Manager Geoff Hughes told Sunrise Exchange News policyholders’ rates will increase marginally because of the move, but the cost will be negligible.

“We’re talking about an increase of less than $20. In the grand scheme of things $20 isn’t much when you’re guaranteed your home is totally covered.”

Mr Hughes says the initiative relates only to home buildings, and there are no plans to extend total replacement to contents policies. “Contents can vary enormously from customer to customer, and it’s really a different kettle of fish.”

COO Michael Kay says the move removes the difficulty of estimating the cost to completely rebuild a home and gives customers peace of mind.

“It’s a big call to offer this kind of benefit, but it’s a call we confidently make, having thoroughly researched, developed and tested complete replacement cover among Australian insurance customers.

“We believe this sets a new standard for the Australian insurance sector.”