Many Australian home insurers are still not doing enough to help customers pick the policy that is right for them, according to the corporate watchdog.
The Australian Securities and Investments Commission said on Tuesday the industry can do more to help consumers avoid the risk of being underinsured.
With natural peril claims on the rise, ASIC is concerned that customers could be left out of pocket if disaster strikes.
"Our goal is to make sure that consumers buy insurance that better meets their needs including by helping to reduce levels of underinsurance, especially when there are natural disasters," ASIC deputy chair Peter Kell said in a statement.
The insurance industry paid out more than $4 billion due to damage from major weather events, such as Cyclone Marcia, over the summer of 2014/15.
Nonetheless, five of 12 companies surveyed by ASIC do not provide up-front information about full rebuilding costs due to natural perils, despite the watchdog urging them to do so in October 2014.
Two still don't provide an online calculator for consumers to estimate the amount they need to insure, while one doesn't even define what the sum insured is.
The insurers participated in the survey on condition of anonymity.
The performance was even worse when it came to customers buying insurance over the phone.
ASIC wants companies to better explain that the sum insured needs to cover the complete replacement of contents or complete rebuilding of a customer's home.
Insurance Council of Australia chief executive Rob Whelan said the industry had improved its performance on a year earlier, when not a single insurer defined sum insured online, but conceded it could do better.
Mr Whelan said insurers were trying to eliminate jargon and better provide clear information to consumers.
"Like all financial products, insurance can be complicated and implementing all of the effective disclosure taskforce's recommendations is a long-term process," Mr Whelan said.
ASIC's SURVEY OF 12 MAJOR INSURERS
* Five don't provide full information about natural peril rebuilding costs
* Two don't provide online calculators for consumers to estimate the sum they need to insure (seven don't over the phone)
* One doesn't define the sum insured amount (three don't over the phone
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