What does building sum insured mean?

Not sure what “building sum insured” actually covers? You’re not alone. It’s one of the most misunderstood terms in property insurance, yet one of the most important.

Building sum insured: What it is and why it matters

The building sum insured is the maximum amount your insurer will pay out if your property needs to be rebuilt from scratch due to damage or total loss. This figure should reflect the total rebuild cost, not the market value of your home.

So, what’s included in a rebuild cost?

• Demolition and debris clearance

• Materials and labour

• Architects, surveyors, and legal fees

• Compliance with modern building regulations

One of the biggest misconceptions is equating market value with rebuild cost. Market value includes the land and factors like location and housing demand. Rebuild cost is purely about what it would cost to reconstruct the physical building, and in some cases, it may be higher than the market value, especially for properties with unique features or specialist materials.

Why this affects your insurance

If you underestimate your building sum insured, your insurer may apply the average clause in the event of a claim. That means a reduced payout, leaving you to cover the shortfall. It’s a costly mistake, but thankfully an avoidable one.

How to get it right

Avoid guesswork. A professional desktop assessment calculates your rebuild cost accurately, ensuring your sum insured reflects the reality of your property. This protects you from the risks of underinsurance and from paying more than you need.

Watch Amy explain it all

Still unsure? Watch my 2-Minute Tuesday Ask Amy video, in which I explain what building sum insured means, how it differs from market value, and why getting it right is essential to avoid underinsurance.

Got a question? Ask Amy

Do you have more questions about rebuild costs or property insurance? Or maybe something fun and light-hearted? Email AskAmy@RebuildCostASSESSMENT.com, and Amy might feature your question in the next 2-Minute Tuesday!

Don’t risk underinsurance – get assessed today

With accurate rebuild cost assessments from RebuildCostASSESSMENT.com, you can be confident your home is properly protected.

Need help? Contact Us for a quick and easy desktop assessment today.

---