Should I increase the sum insured for buildings when buying a new policy or at renewal and what is under-insurance?
Under-insurance refers to a scenario whereby a property is insured for less than the value it would cost to rebuild or reinstate it. In event of a claim, your home insurance policy will cover the full cost required to reinstate your property to its pre-accident condition. However, this may not be the case if you are underinsured. If you are underinsured, this means you have under estimated the cost to rebuild or reinstate your property and you may find that the current insurance cover you have purchased only partly covers that cost.
How could you be under-insured?
If you make changes in your home, be it a kitchen extension, attic conversion or even new windows it's important to inform your insurer of any such changes as it could alter your property rebuild amount. At renewal time, you may have rolled forward your policy information. This means previously accurate policy information may be out of date and fails to reflect year-on-year inflation. If you are unsure of what your rebuild cost is, the SCSI have a House Rebuild Calculator available, which will give you an indicative rebuild cost of your home. This can be found here.
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