Buildings insurance is the part of your homeowner’s insurance policy that covers the actual structure(s) on your property. This includes the main structure that is your home and can include others, such as the garage, garden shed, swimming pool and perimeter fencing. The level of cover needed varies by property and should be calculated using a few basic rules. Too much cover can result in you paying unnecessarily high premiums, while too little may mean you end up with an uncovered claim.
What is the sum insured?
‘The sum insured’ is the term for the maximum amount a buildings insurance policy will pay in the event of a claim. Because of this, the sum insured should directly reflect the cost of rebuilding the property from scratch. Which is to say in the event of everything being completely destroyed. It should never reflect the market value of the property; the price you’d receive if the property were sold.
How to calculate the sum insured.
Calculating the sum insured can be a little complicated, so it is advisable for most homeowners to bring in assistance. For a small fee, a chartered surveyor (a registered member of the Royal Institute of Chartered Surveyors) will prepare a professional rebuilding cost assessment that can be used for insurance purposes.
Unlimited Cover and Simplified Assessment
As alternatives to the above, some buildings insurance policies will offer unlimited cover, while others offer cover based on a simplified assessment using pre-set criteria.