The Policy defines Buildings as your home (including outbuildings), its landlord's fixtures and fittings, swimming pools, patios, terraces, footpaths, satellite dishes, external antennae, hard courts, walls, gates and fences. If you wish, this definition may be extended to include seawalls, docks, piers and jetties.
Your Sum Insured should represent the full rebuilding cost of those items to be covered by your policy.
In arriving at this figure, please be sure to use up to date construction costs and to include an amount (usually an additional 10%) for the cost of removing debris after a loss and for architects', surveyors' and legal fees.
These are defined as household goods and personal effects (including Valuables), fixtures, fittings, and interior decorations belonging to you (or for which you are responsible), or belonging to your family or domestic employees permanently residing with you, all situated within your home and used solely for domestic purposes.
Certain items are not covered, such as cash, banknotes, stamps (but these are included under Section 4 of the policy), animals, property used in connection with any business or profession, etc.
Your Sum Insured for your Contents should be equivalent to the replacement cost of all items within your home. The best way to arrive at this figure is to make an inventory of every item in each room and then apply its value at today's prices.
What happens if your sum insured is too low?
We do agree that it is not an easy matter to arrive at an accurate Sum Insured, even when some expert assistance has been provided. Because of this, there has been an element of flexibility included in the policy, which eliminates any penalty so long as your sum(s) insured are within 85% of the correct figure(s).
However, if your Sum(s) Insured are below this level, and should you have a loss, the amount claimed will be reduced in proportion to the degree of under-insurance.
The following example will help demonstrate this situation.
|Rebuilding Cost of the home
|Policy Sum Insured
Here the Policy Sum Insured is only 60% of the rebuilding cost. Since this is outside the 85% concession allowed by the policy, the Amount Claimed is reduced by the degree of under-insurance. The degree of under-insurance is 40%, so the Amount Claimed ($50,000) is reduced by 40% to $30,000.00. You, the policyholder, are considered as your own insurer for the shortfall and so must finance this amount from your own resources.
Be sure to avoid under-insurance. Regularly check your sum(s) insured.