UNDER AND OVER INSURANCE – HOME BUILDINGS

UNDER INSURANCE WITH A REPLACEMENT POLICY
 
If you have a replacement policy and under insure your home, the insurer may apply depreciation before settling any claim. Under a typical replacement policy you are under insured if the sum insured on your current Policy Schedule is less than 80% of your home's replacement value. The insurer will not apply depreciation if you make a claim and the cost of repairing your home is less than 5% of the sum insured.

UNDER INSURANCE WITH AN INDEMNITY POLICY

If you have an indemnity policy and under insure your home, the insurer may refuse a claim or cancel the policy, or do both. You are under insured when the sum insured on your current Policy Schedule is not the replacement value of your home less a reasonable allowance for depreciation.

OVER INSURANCE

Whether you have an indemnity or replacement policy, it is important that you do not over insure your home. Where possible the insurer will match building materials and such but we will not upgrade your home if you have over insured.