What are Sums Insured
Firstly, we need to differentiate between buildings and contents cover. The answer is quite simple, if you were to move house in the morning what would you take with you? TV’s, couch’s, table & chairs, beds, curtains, rugs, pictures, radios etc, all these items are considered contents insurance and should be calculated in your contents S.I. All items that you would leave behind, carpets ,white goods, wardrobes, sanitary ware etc, all these items are considered as permanent fixtures and must be calculated in your buildings S.I.
Under Insured
It’s important that the property is insured for its full value to avoid claims being reduced due to under-insurance. When a property is under-insured, any claims made will be subject to an average. This means that any valid claim pay-out will be proportionally reduced by the amount that the property is under-insured.
Market value
It is sometimes thought that the market value of the house, in other words the price achieved when the property is sold on the open market, is the value for which the property should be insured. This is, however, irrelevant as the market value of a property generally has little relationship to the reinstatement value.
The average clause
Unless your property is insured adequately, you may be penalised under your policy by having to pay a certain proportion of the reinstatement costs. It is therefore extremely important to have the property sufficiently insured. Where, for example, the insured sum is only 75% of the total reinstatement cost, you will only receive 75% of the agreed cost of reinstatement, whether the claim is made for partial replacement or total loss.
For example, in the case of a house insured for €270,000, where the total reinstatement cost was €360,000, the insured party would receive only €270,000 to reinstate the house in the event of the total loss. The insured party would thus be obliged to provide the balance of €90,000.
Similarly if there is a partial loss, which costs €60,000 to repair, the insured party would only receive €270,000 – €360,000 X €60,000 = €45,000 and would have to provide the balance of €15,000.
Reinstatement
Most insurance is intended to leave you in substantially the same position after the damage as before. Therefore, in order to avoid problems with deductions for wear and tear, you should make sure that your policy includes cover for full reinstatement, or “new for old”.
How to use measure your house
- If your house conforms to the standard types in the included in the calculator menu, you can use the following method to give a broad indication as to the amount for which you should insure.
- You should calculate the total floor area of your house by measuring the internal length and breadth of the house and multiplying these measurements together.
- Normally the upper floor is the same size as the ground floor. However, if it is different you should calculate each area separately. The area of the ground and upper floors should be added to give the total floor area of the house.
- You should add for higher than average kitchen fittings, built-in wardrobes, finishes, etc. You should also add for fire alarms and security alarms, and for any outbuildings, walls, fences, patios, etc.
Annual renewal
It is essential that you re-assess your level of cover every year, based on current rebuilding costs, making allowance for any improvements or extensions that you may have made since your last renewal date.
Building Regulations
The reinstatement costs outlined will cover the cost of rebuilding your home in compliance with current building regulations. In case of doubt concerning any aspect of your policy, you should contact your insurance company or broker.
Calculating my Sums Insured
We use the Charted Surveyors of Ireland calculator to calculate Sums Insured for our clients.
