Sum insured
The sum insured is the maximum amount an insurance policy will pay out for a covered loss. For buildings insurance, it is the rebuild cost of your home. For contents, it is the total replacement cost of all your possessions. Setting the sum insured too low results in under-insurance, which can reduce your claim payout proportionally. Also called coverage limit or, in life insurance, sum assured or face amount.
Getting the sum insured right
Under-insuring — setting the sum insured below the true value — can trigger the average clause (proportional reduction of claims). For buildings, use the RICS rebuild cost estimator, not the market value. For contents, a room-by-room valuation gives a defensible figure. Review both annually.
For home rebuild costs see our article on home rebuild costs and under-insurance. For contents see the contents valuation guide. See also under-insurance and limit.