Calculating the sum insured for buildings and contents

9th April, 2019

It’s important you insure your buildings and contents for the correct amount. Overestimating their value could result in paying a higher premium than necessary, while underestimating could mean you are under-insured which could result in your insurer reducing the amount they pay in a claim meaning you will not fully benefit of your insurance policy.

Contents insurance covers anything you would take with you if you moved house, and generally includes such items as furniture, electrical goods, clothes, jewellery and money. The Association of British Insurers estimates that the average home contains £35,000 worth of contents, so it’s important you have the right level of cover.

Trying to put a value on the contents of your home may seem daunting, but it’s simply a matter of being organised. A good idea is to create an inventory of your household items and possessions on a room-by-room basis. Don’t forget out of sight places, such as the attic, cellar or shed.

One easy way to determine what would be contents is to imagine turning the house upside down, anything that would fall out would be contents, everything from furniture and electronics to curtains, DVDs, crockery and freezer contents. Valuable possessions such as jewellery, antiques or art may need to be listed separately as high value items.

Most insurance claims are settled on a ‘new for old’ basis, so you should calculate individual item costs on the price of buying at today’s prices, so it may require a little research. It’s a good idea to keep receipts, manuals or photos of your possessions as proof of purchase.

Buildings insurance protects the permanent fixtures in your home, such as walls, floors, roof, ceilings and bathroom fittings, generally covering them against events such as fire, storm & flood, escape of water from burst pipes, fallen trees and accidental damage usually an optional extra.

To ensure you are adequately insured, you will need to calculate the rebuild cost, including labour and materials, if your home was damaged beyond repair. This is typically lower than your home’s market value or sale price, and is based on such things as type of property, construction materials, year of build, roof structure and dimensions.

Inflation will affect the price of materials and other costs such as builders’ wages which will affect the rebuild costs, therefore most policies will offer inflation protection such as index linking the sums insured.

If you own a standard brick-built home, there are two ways to assess the rebuild value of your home: either ask a chartered surveyor from The Royal Institution of Chartered Surveyors to carry out a professional assessment or use the Building Cost Information Service’s house rebuilding cost calculator. Many insurance companies insure for an unlimited sum, which is usually high, with fixed premiums, offering no flexibility, which may not be right for you.

If you’ve recently purchased a new build home, you’ll find the figure you require in your mortgage valuation or deeds. If you’ve renovated your home or added an extension, it’s important to recalculate the rebuild cost and check that you are fully insured. If your home is a listed building, has special architectural features or is made from non-standard materials, its rebuild cost may be higher than its market value, and you should contact a surveyor for an accurate assessment.

Things to ask when arranging buildings cover include: is it index linked, is there an excess to pay and is there a ‘no claims’ discount? You should also check if the policy provides cover for Home Emergency, damage from burst pipes, and alternative accommodation if you need to live elsewhere while damage is being repaired.

Whatever your type of property, Routen Chaplin is happy to advise on all aspects of contents and buildings insurance, ensuring you have correctly valued your possessions and rebuild costs, and are protected by the appropriate level of cover.


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