Failing to insure your building for the correct value can be disastrous. On your policy documents, you will see this referred to as ‘the buildings sum insured’ or the ‘buildings declared value”. If you under-insure the buildings, the insurers could reduce your claim in proportion to the under-insurance. For example, if you insure for 50% of the correct value, only 50% of your claim might be paid.
Most policies make provision for re-building cost increases over time, but if the original value is wrong this does not help much. We recommend you get the buildings valued by a surveyor with experience of insurance valuations. The valuation exercise should be repeated every three to five years, as although insurers may index-link the sum insured each year, this is based on national indices and the actual cost changes do vary on a regional basis. So over time, your rebuild value may vary from the buildings true valuation.
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