Don't just guess when setting your Sum Insured
What is a Sum Insured?
When you take out insurance cover you’ll need to specify a Sum Insured that represents the maximum total amount the insurer will pay in the unfortunate event of a loss. It’s important to make sure you have the right Sum Insured and level of cover. This means you’ll be able to replace, repair or rebuild your property, however also ensures that you’re only paying for cover you actually need.
When setting the sum insured it is important to consider what type of cover your policy offers, either replacement or indemnity cover.
- Replacement value means the cost of replacement, repair, or reinstatement without deduction for wear and tear or depreciation.
- Indemnity value/Market value is the amount deemed needed to put you back in the same financial position you were in immediately before the loss (deduction for wear and tear or depreciation is applied).
If you would like more information on what type of cover you have please consult your policy wordings or contact our team.
Setting a Sum Insured for your home
When looking to set your home sum insured we recommend that you:
- Ask a professional like a registered valuer, quantity surveyor or licenced building practitioner to assess you estimated rebuild cost. Getting specialist advice ensures that any unique aspects of your home are taken into consideration.
- Use the Cordell Calculator. This is an independent tool that uses information from a variety of third party sources and typical rebuild costs for homes with similar materials and features. Simply enter your address and check the information is complete and accurately describes your home.
A key benefit of using the above methods to set your Sum Insured is you will be eligibile for Vero’s SumExtra benefit.
What is SumExtra?
SumExtra is a benefit which provides eligible home policyholders extra cover at no extra cost. If your home is damaged or destroyed in a natural disaster and your Sum Insured isn’t enough to pay for the rebuild or repair, with Vero’s SumExtra benefit you’ll receive up to 10% extra cover. Or, if the loss to your home is caused by an event other than a natural disaster, with SumExtra you’re covered for the costs to rebuild or repair your home even if the cost exceeds the Sum Insured.
To be eligible your Sum Insured must be at least the value of your estimated rebuild cost (exclusive of GST), which needs to be less than three years old.
We recommend you check your Sum Insured regularly. The costs of labour and building materials in New Zealand can change rapidly. Make sure you also update your Sum Insured if you make any improvements or alterations to your home.
Setting a Sum Insured for your contents
It can be hard to put a value on your prized possessions. To assist you may opt to use a contents valuation guide to calculate the value of items found in your home, room-by-room.
- You can change your sum insured at any time. It’s a good idea to review your possessions and update your sum insured annually, particularly if you've made an expensive purchase during that time.
- Your policy may have limits for individual items. This means some items may need to be specified individually on your policy schedule to be fully covered.
Setting a Sum Insured for your vehicle
Vehicle values change over time depending on the vehicle’s age, make, model and market conditions, as well as things that are specific to your vehicle such as mileage, maintenance and modifications. The sum insured of your vehicle should reflect the vehicles current market value.
Some tools and resources that may help you determine your vehicles current market value:
- Contact your local dealership for assistance
- Visit driven.co.nz for a free calculator for light vehicles
- Visit redbook.co.nz for a valuation