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.