Buildings sum insured is the rebuild cost limit on a buildings insurance policy, not the home’s market value.
Buildings sum insured is the amount your buildings insurance is set to cover for your home’s structure. It is the rebuild-cost limit, not the price you paid for the property or the amount it might sell for.
The ABI explains that buildings insurance should be based on the cost of rebuilding your home, not its market value. This can include labour, materials, demolition, site clearance, and professional fees.
Your buildings sum insured can apply to walls, roof, floors, fitted kitchens, fitted bathrooms, garages, and other permanent parts of the property. The exact cover depends on the insurer and the policy wording.
When you take out home insurance, the insurer may ask for the rebuild cost of your home. This helps set the maximum amount the policy may pay for a buildings claim.
MoneyHelper explains that buildings insurance can cover the cost of repairing or rebuilding the structure if it is damaged by an insured event, such as fire, flood, storm, or escape of water. Each policy is different, so you should check what is included and what is excluded.
Some policies give a high set limit or unlimited buildings cover. Others ask you to choose a specific sum insured. A higher limit does not mean every claim will be paid in full. The claim still depends on the cause of damage, the policy terms, any exclusions, and the excess.
If the buildings sum insured is too low, you could be underinsured. MoneyHelper warns that if your cover is not enough to rebuild your home, the insurer might not pay the full claim.
This can also affect smaller claims. The Financial Ombudsman Service explains that some policies include an average clause. If this applies, the insurer may reduce a claim in line with the level of underinsurance.
For example, if a home should be insured for £400,000 but is only insured for £200,000, the insurer may treat it as 50% underinsured. Subject to the policy terms, this could mean only 50% of a valid claim is paid.
You should check that your buildings sum insured is enough to rebuild the whole property. This is different from the property’s sale price.
The ABI suggests using a rebuild cost calculator for many standard homes. For non-standard homes, listed buildings, or homes with special features, the ABI says a chartered surveyor may be needed to work out the correct rebuild cost.
You may need to review the figure if you extend the property, convert the loft, change the roof, add rooms, or carry out major building work. You should also take extra care if the home has flood risk, subsidence, non-standard construction, or listed building status.
It is also worth checking any exclusion, excess, policy condition, or limit that may affect a claim.
Buildings sum insured can also matter for a let property. If you own a rental home, the rebuild cost can affect your landlord buildings insurance and the cover available.
A standard home insurance policy may not be suitable for a rented property. Landlord policies may also include or offer cover for property owners’ liability, loss of rent, tenant damage, or legal expenses, depending on the insurer and policy.
At Got You Covered, we arrange home insurance and landlord insurance for a range of property needs. This can include homes that may be harder to insure, such as homes with flood risk, unoccupied homes, listed buildings, let properties, or homes with past claims.
Cover, price, and acceptance depend on the insurer, the property details, and the policy terms.
Buildings sum insured is the rebuild-cost limit for the structure of your home. It should be enough to rebuild the property, not just match its market value. If it is too low, a claim may be reduced, so it is important to check the figure and review it when your property changes.
