Sum insured – The top 5 things you need to do

So you’ve read up on the basics of sum insured and the changes that may affect your house insurance, but now what?  Here, we’ve put together the top 5 things you need to do when looking at your house insurance.

1.     When your policy is up for renewal this year, your insurer may provide an estimated sum insured figure for your policy.  This will be based on what they know about your property already, but may not be exact to your situation, especially if you have any unusual or character features or your house is highly valued. 

TO DO: When you get your renewal, investigate what your sum insured cost should be so that you can make sure this is reflected in your new policy.  It is your responsibility to ensure you select a suitable sum insured amount for your policy.  If you accept the insurers suggested sum and that turns out to be too low, the insurer will not be liable for the shortfall. 

Most insurers are providing “sum insured” calculators to allow you to enter some details on your property.

2.     As with any insurance, keeping the figure up to date is imperative.  Although a difficult decision, especially if it results in an increase in premiums, make sure the figure is accurate – you never know when you might need to call on your insurance.

TO DO: Upon your renewal, make sure your figure is up to date and fully reflective of any changes that have been made to your home especially.  You will also need to see whether general costs, such as construction and demolition costs have increased each time you evaluate your sum insured cost.

3.     Homes come in all different shapes, sizes, materials.  There is every chance that your home has some kind of unique characteristics that you will need to equate for.

TO DO: You need to consider whether in the case of a disaster you would want your home built exactly like it is now, with all the unique characteristics included.  You may decide that this wouldn’t be necessary, which could potentially reduce your rebuild cost and therefore also your premiums.

4.     If a disaster struck, building resources would be depleted and would be more expensive as a result.  This isn’t factored into sum insured calculators.

TO DO: You might want to consider giving yourself a buffer on top of your sum insured figure.  Although premiums going up are not what any home owner wants, paying a little bit extra now may mean less in the future or that you will have no hidden surprises later on.  Use our table to see how much extra you might have to pay by increasing your sum insured figure.

5.     Even if you’ve read a little bit of information, with something so critical, it may be worthwhile in the long run to get some reassurance.

TO DO: Take a look at how to calculate your figure or get some help from the people who know what they are talking about. 

The key thing to remember is that it is down to you.  It’s better to try and get your policy and its details correct now, rather than finding out when it’s too late.

EXTRA HINT: Sum insured isn’t that new to us, it has been quite normal to agree to a sum insured value for contents for years.  

However, many of us never think about the sum insured value of our contents from one year to the next.  So, once you've worked out your sum insured for your house, it’s worth spending a few minutes checking how accurate your contents is as well.  Walk through each room making an estimate of the cost of replacing everything in the room, including furniture, appliances, rugs, carpets, jewellery, electronics, TV,  paintings and anything else of value that isn't part of the house - you'll be amazed how quickly things add up.  Remember to check your policy to see if you need to declare any specific items, such as jewellery or watches over a certain value.

PropertyIQ, the market leading property data and analytics company, is working with major insurers to provide them with latest, most comprehensive property data and insight whilst they transition to sum insured policies and going forward.