Home Insurance – Sum Insured
Your home could be one of the most expensive assets you own.
Back in 2013, most insurance companies changed home insurance policies from open-ended ‘replacement’ policies to ‘sum insured’ policies.
This means the insurance company will only pay up to the sum insured that you choose, not for the open-ended replacement of your home if it is destroyed. The sum insured is the maximum amount an insurer will spend to reinstate your home in an event of a claim.
You may have had a ‘replacement’ policy, however at the time of policy renewal the terms and conditions may have been amended and unless you read through the renewal paperwork, the change may have been missed.
What do you need to do?
Ensure you read any correspondence you receive from your insurance company.
If your policy has changed or is going to change to ‘Sum Insured’, you will be required to work out a replacement value for your home.
The ‘Sum Insured’ should be the amount it would cost to completely rebuild your home, including features such as driveways & paving, fences, sheds, swimming pools and entertainment areas.
How do you do that?
Use a web-based service e.g. www.tinyurl.com/cordellcalculator
Get a Valuation for Insurance Purposes done by a registered valuer or estimate from a licensed builder or building assessor.
What if you get it wrong? You will lose out.
Why? In the event of a claim, the sum insured may not be sufficient to replace your home.
If in doubt… Seek professional assistance from an insurance broker. Insurance brokers are independent and can help find the right policy for you.
Disclaimer: The content of this article is intended for general information only and issued to readers as a guide and for their private information. Nick Hoogeveen & Associates website articles do not constitute advice and readers should not act solely on the basis of the material contained within this article. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of these areas.