What is 'Sum Insured'?

The sum insured is the maximum amount the insurance company will pay to rebuild your home or replace/repair the lost or damaged contents, in the event of a claim.

It is also important to know that if the cost to repair/replace/rebuild costs less then the sum insured, the insurance company’s liability is limited to the lesser amount, unless otherwise agreed upon (known as “an agreed value”)and reflected on your policy schedule.

If you are underinsured, the “Average Condition” will be applied to your claim.

What is 'the Average Condition'?

Definition of the “Average Condition”

You need to insure your building & or contents for the total current replacement value your building/contents with a new one.

If you insure your building for an amount less than the total current replacement value, then your insurer will only pay your claim proportionately.

For example, if the total current replacement value is R1 000 000 (one million rand) and you insure your building or contents for R500 000 (five hundred thousand rand), your insurer will only pay 50% (fifty percent) of your claim

because you will only have paid us 50% (fifty percent) of the premium that your insurer would have charged for R1 000 000 (one million rand) of cover.

An Example of The Average Condition being applied to your claim

To avoid the Average Condition, we strongly suggest you:

  1. Contact your broker for advice on how best to insure your assets (buildings & contents etc).
  2. Carry out a “value-at-risk” exercise, to help you determine what Sums Insured you should be allocating to your assets.

Your insurance broker or insurance company should provide you with a “value-at-risk” inventory form. If you have not received one, you can request for one.

In the spirit of “Treating Customers Fairly”, we have formulated a very basic “value-at-risk” calculator for Buildings.

Domestic Buildings

At the end of the calculation, you have the option of emailing the results to your preferred email address.