Thatch Owners Sums Insured Jargon Busting Guide

Sums Insured. What is it and why do you need to review it?

If you’ve got your home insurance in place surely that’s the job done? Yes – partly. But have you reviewed your ‘sums insured’ lately?

What is ‘Sums Insured’?

This is the insurance world’s way of referring to the total cost of rebuilding your home from scratch. It would also include the price of any professional costs and fees – from the planning stage to the placing of the last tile on the roof. (No one likes to think of their home going through a complete re-build, but with over 3000 fires devastating homes each month in the UK it is unfortunately something of which to be made aware.)

The cost of rebuilding your property will increase over the years, so be sure to use our index-linked policy. This policy will update the ‘sums insured’ figure to reflect the changing cost of rebuilding.

However, you may also want to have a new survey completed every few years with a rebuild surveyor to be sure. It may be worth considering using services such as Scott Brown, Risk Management Surveyors www.sbrms.com  who can perform site surveys (either online or on-site) plus as a Lloyd & Whyte client, you receive a preferential rate.

What ‘Sums Insured’ is NOT.

‘Sums Insured’ is NOT the market value of your home. The market value of your home can fluctuate depending on many external factors. The re-build cost of your home is entirely different.

Is my Insurance Premium too high?

The beauty of investing the time in assessing your ‘sums insured’ value can in turn be beneficial for your premium. All too often clients estimate the value of their home and end up paying too much for their monthly premium. It’s worth checking to be sure.

Is my Insurance Premium too low?

Under-insurance can unfortunately have devastating consequences and something which you will want to avoid. Many insurers have something they call the ‘Average Clause’ which can leave you short when it comes to footing the re-build bill.

What is the Average Clause?

Let’s imagine that your heritage home is insured for £600,000, it suffers a fire and a developer quotes the rebuild cost of £1,000,000.  This poses a problem for you and your insurer. In this example it can mean that you are only reimbursed 40% of the total cost because this is the stated building sums insured of your home. With this in mind you would need to find £400,000 of your own money to cover the cost of rebuilding your period property. Not a happy day.

So what can I do to avoid an astronomical bill?

Consider getting a re-build cost assessment done. James Scott Brown from SBRMS (Risk Management Surveyors) says 40% of household properties are underinsured and in turn are normally covered for less than 70% of their correct rebuild cost. Is your home one of them? It doesn’t have to be. We suggest giving James a call and getting an updated re-build cost assessment performed.

So what happens now?

For advice on Sums Insured or it’s related topics please speak to our advisors in the Heritage Team who will be more than happy to put your mind at ease and make sure that your home has the correct cover in place.

Lloyd & Whyte Heritage. What matters to you, matters to us.

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