What brokers should tell clients about building sums insured

Getting the building sum insured right is one of the most important parts of arranging appropriate cover. It is also an area that can easily cause confusion if the basis of the figure has not been clearly explained. At a time when the FCA remains focused on fair value and client outcomes, brokers have an important role to play in helping clients understand what the sum insured is really there for.

A building sum insured is not the property’s market value and it is not a figure that should simply be carried forward year after year. It should reflect the cost of rebuilding the property at today’s prices, including demolition, debris removal and professional fees.

One point worth making clearly to clients is that index-linking has its limits. It may help keep an existing figure broadly up to date. It cannot fix a sum insured that was inaccurate in the first place. If the building has not been professionally assessed for some time, or if alterations or improvements have been made, it is essential to review the figure properly with a Rebuild Cost Assessment (RCAs).

Why accuracy matters

It is also helpful to explain that underinsurance does not only matter in the event of a total loss. It can also affect partial claims, where the average clause may reduce the settlement. Overinsurance brings its own problems, potentially leaving clients paying more than they need to. Accuracy matters at both ends.

Regular RCAs can help clients avoid shortfalls and give brokers a clearer record of how the sum insured has been arrived at. That can be valuable at renewal, at claim stage and whenever questions are raised about the basis of cover.

Clients are more likely to feel confident when they can see how a figure has been reached. Clear explanations can build trust and help avoid misunderstandings later on.

Getting the figure right matters, but so does the conversation around it. When brokers explain sums insured clearly and encourage regular review, they are giving clients practical value at renewal and greater confidence in the cover they have in place.

Looking for a clearer basis for building sums insured? Our Rebuild Cost Assessments help brokers support clients with accurate, professionally assessed figures.

Contact us to find out more.