Sum Insured and Underinsurance
Sum insured is the maximum amount your insurer will pay for a claim. For buildings insurance, it should equal the full rebuild cost of your home — not the market value or purchase price.
Rebuild cost ≠ market value. A house may be worth $400,000 on the market but only cost $250,000 to rebuild from scratch. Alternatively, construction costs may have risen so much that a $300,000 insured property would cost $450,000 to rebuild today.
Underinsurance is when your sum insured is less than the true rebuild cost. Most Caribbean policies apply the 'average clause' — if you are insured for 70% of the true value, the insurer will only pay 70% of any claim, even a small one. Review your sum insured every year, especially after renovations or when construction costs rise.
What Is and Is Not Covered
Typically covered: fire, lightning, explosion, storm/windstorm (if included), earthquake, burst pipes, theft, malicious damage, and accidental damage (on some policies).
Typically NOT covered: gradual wear and tear, rot, mould, infestations, deliberate damage by you, flood (unless added), war and civil unrest, and damage caused by lack of maintenance. Insurers expect you to maintain your property — a leaking roof that you ignored for years will not be covered.