Calculating the Building Insurance Sum Insured
In insurance speak, the ‘sum insured’ means the amount of money your home is covered for, in the event of a disaster. No matter what happens to your home, even if nothing is left standing, the sum insured will be paid to you if you have building insurance.
The amount your policy will cover is typically different from the retail or real estate value of your home. Instead, building insurance covers the cost of rebuilding your property from the ground up, assuming nothing is left. Considering that many disasters, such as explosions, fires, or severe floods, could possibly wipe out your home in its entirety, this extensive coverage is important.
But how can you determine what the sum insured will be for your building insurance policy? It is possible to calculate the sum with the help of the Association of British Insurers website, but it’s quite complicated. If you’d rather an expert determine the sum insured, consult an agency such as the Royal Institution of Chartered Surveyors for a professional estimate. Chartered surveyors can more easily perform these calculations after surveying your home and property; at a price of course.
While some companies do offer unlimited coverage, most of the affordable household insurance plans are based on a calculated value only. Other providers provide coverage based on an estimated value, which they determine by the location of your home and other property details. Compare home insurance to find the best plan for your needs.
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