Calculation of the area of a house for insurance

Most domestic house insurance policies provide for replacement cover up to the total size of the dwelling that has been declared and which is shown on the policy schedule. The obligation is on the individual property owner at the time of taking out the policy to give the insurer the area measurement of the property.

It is very important that the calculation of a house size is done accurately for the purpose of insurance. Insurers establish their overall exposure, as well as the premium they need to cover that exposure, on the area of the dwellings that they insure. If the area of a property advised to the insurer is under estimated, the policyholder will end up with a smaller house in the event of it being destroyed.

The area of a house is based on the external perimeter measurements of the dwelling. If you measure the internal area of the rooms and total these to find the area to insure, you may end up with a 10 - 15 % smaller area than your house actually is. This means you could end up with a 170-180 sq metre house replacing your 200 sq metre dwelling.

If you have commissioned a valuation of your property you will often find the total floor area included in the valuation report. When asking for a valuation, make sure the valuer knows you will be relying on the area measurements for insurance purposes. It is best not to rely on the Quotable Value floor area measurement. Experience has shown this can sometimes be wrong.

To find the total area of your house:

Using a tape, measure the external perimeter of the building. If you have a multi story house make sure you include the perimeter of each floor,
Measure the external area of decks and covered pergolas. Don't include uncovered paved or concreted areas,
Measure the perimeter of any garage or out buildings,
Calculate the area of the building, decks and outbuildings. If you are uncertain how to do this, ask for the assistance of an architect, surveyor or valuer.

Give these calculations to your insurance company when taking out your policy.

Remember to update the house area when you make additions or add a deck, garage or outbuilding.

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