Buildings insurance
The sum insured may relate to rebuild value. This is not the same as what the home would sell for.
Home guides →Glossary • Definition
What is “sum insured”?
The sum insured is the maximum amount an insurer may pay for a covered loss under a policy (or for a specific section of the policy), subject to terms, conditions, and excess.
- âś” What it means
- âś” Why it matters for claims
- âś” How to avoid underinsurance
In simple terms
Think of sum insured as the “ceiling” on what the insurer may pay. If the real cost of the loss is higher than your sum insured, you may need to pay the difference (and your claim settlement could be affected depending on the policy terms).
- Sum insured can apply to the whole policy or specific sections
- Home/buildings often uses rebuild value, not market value
- Contents may also have item limits for valuables
Where you’ll see sum insured
Most common in home and contents insurance, but can appear elsewhere too.
Contents insurance
You’ll often set a contents sum insured, plus separate limits for valuables and high-value items.
High-value items guide →Specified items
Individual item limits can apply (e.g., jewellery, watches, bikes). You may need to list items separately.
Read guide →Life insurance (different concept)
Life cover is often described as “sum assured” rather than sum insured, but the idea is similar: a maximum payout.
Life guides →Why sum insured matters: underinsurance
A common problem is setting the sum insured too low.
Underinsurance risk
If your sum insured doesn’t reflect the true value of what you’re insuring, the insurer may not cover the full loss. In some cases, claims can be reduced depending on the policy wording.
Underinsurance explained →- Buildings: use rebuild value guidance, not sale price
- Contents: estimate total replacement value of your belongings
- Check single-item limits (e.g., jewellery/tech)
- Update sums insured when you buy expensive items or renovate
What to check in a policy
These details affect how claims are settled.
Section limits
Check whether limits apply per item, per room, per claim, or for the whole policy period.
Settlement method
Policies may settle via repair, replacement, cash payment, or vouchers depending on terms.
Indemnity explained →Excess
The excess is what you contribute to a claim. It sits alongside sum insured and affects real out-of-pocket cost.
Excess explained →Premium impact
Higher sums insured can increase premiums. Compare like-for-like where possible.
Premium explained →Ready to compare?
Use your sums insured as the basis for comparing providers fairly.
Affiliate disclosure
Some links on this site are affiliate links. If you choose a provider through a link, we may earn a commission at no extra cost to you. Always check the provider’s website for the latest terms and product details.