Home insurance is the insurance that covers the structure that is your home. It can also be extended to include other structures on the property, such as sheds, garages, swimming pools, and fences. While most new home owners realise they will need home and house insurance (the minimum, a condition of their mortgage), deciding upon how much home insurance is needed can be daunting.
The sum insured
‘Sum insured’ is the term used for the amount the policy will cover and the maximum amount the insurance company will pay you – even if your home has been entirely destroyed. It is also the amount that it would cost for you to rebuild your home. It is not your home’s market value, i.e., the amount your home would be worth if sold, and your insurance should not be based upon that number.
Calculating sum insured
While you can work out your own sum insured, the calculations can be pretty complicated, so you may want to bring in some assistance. For a small fee, a chartered surveyor who is a member of the Royal Institution of Chartered Surveyors, will prepare and provide you with a professional rebuilding cost assessment for insurance purposes.
Unlimited cover
Some house and home insurance companies offer an unlimited cover policy. This means you don’t have to worry about how much cover you need or whether you’ve got enough. Other insurers offer coverage based on a simplified assessment based on area, age, type, and size of your property.