Your Guide to Sum Insured and SumExtra

The sum insured is the overall amount you choose to insure your home for. It should reflect the adequate cost of rebuilding your home should a total loss occur.

When determining an adequate sum insured, you also need to include any extra costs that occur if you were to rebuild your home such as; demolition, removal of debris, and council and/or architectural fees. Another factor that should be considered is inflation. You need to set a sum insured that will still be relevant at the end of the 12 month policy. 

A sum insured is not related to the purchase price or market value of your property but instead represents the overall amount that the insurer will pay out to rebuild your home.

Calculating an adequate sum insured is important when setting up your home insurance. If anything should happen to your home, your total sum insured is the maximum amount that will be paid to rebuild your home. If you qualify for the SumExtra benefit, we will pay up to 10% more in addition to the sum insured.

• As a number that represents the maximum payout, it is critical that your sum insured is an adequate reflection of the estimated cost to rebuild your home. Depending on the policy wording of the house insurance product you choose, this value may include GST or exclude GST.
  
• When calculating your sum insured, it is important to consider the construction material and labour costs of rebuilding not only the home but associated special features and recreational features too: outbuildings, garages, carports, driveways, solar panels, retaining walls, swimming pools, jetties and tennis courts.
  
• It is important to review your sum insured amount regularly. Some insurers track a range of factors that can influence rebuild costs for homes in New Zealand, and as a result they may increase your home sum insured. This increase is an average and is not specific to the changing costs of your particular property. So, it is important to recalculate your sum insured at each renewal to ensure you’ve got sufficient cover. You should review your sum insured each year to check that it’s still accurate. Don’t forget to factor in any renovations, extensions or other changes to your home as well as increased building costs.
  

Depending on what policy you have, there are some instances where additional benefits are paid on top of the sum insured. For example, AMPs Comprehensive Everyday Plus Home Insurance has an additional benefit called SumExtra. If you qualify for this benefit, it can provide additional cover if the replacement cost of your home is more than the sum insured amount noted on your policy schedule.

SumExtra makes your home insurance cover go further. If we have accepted a claim for loss or damage to your home, SumExtra provides additional cover at claim time if the cost to rebuild your home is more than your sum insured amount noted on your policy schedule.

SumExtra is automatically included in most of our home insurance products. SumExtra is not offered under AMP Home Plan Cover Option Flexi, however it is an optional benefit with AMP Everyday Home insurance and AMP EverydayPlus Landlord insurance.

To qualify for SumExtra, you need to ensure that the overall amount your home is insured for (also known as sum insured) is at least the value of your home’s rebuild cost estimate.

We will only provide this benefit where all of the following conditions are met:

• The home sum insured at the time of loss or damage is equal to or greater than the estimated replacement cost that we generated when you applied for this policy or when this policy was renewed, whichever is the latest.
  
• The information that you supplied to us about your home which we used to calculate the estimated replacement cost was complete and correct in all respects.
  
• You inform us immediately of any changes to your home, including but not limited to the size or the quality of your home, so that we can calculate an updated estimated replacement cost.
  
• Where there are changes to your home which increase the estimated replacement cost, you increase your home sum insured to at least the amount of the updated estimated replacement cost.
  

A written rebuild/construction cost estimate needs to be obtained from either:

• The Cordell Sum Sure Calculator, a free and independent tool that offers general information and rebuild estimates (not direct insurance or financial advice), or
  
• A suitably qualified professional, such as a registered quantity surveyor or registered valuer.
  

If your home is high spec, has special features, is highly engineered, architecturally designed, situated on sloping or unusual sections, or exceeds a rebuild estimate of $2.5 million, it might be a good option to engage a registered valuer or quantity surveyor to provide a rebuild valuation.

Ensure that your rebuild cost estimate is less than three years old at the time your sum insured was most recently agreed, although, do bare in mind that with fluctuating inflation costs, it would be beneficial to do this at least every 12 months. Keep a copy of your estimate in a safe place to ensure it can be produced at claim time. And remember, if you extend or improve your home, you’ll need to revise your sum insured.