The Building Cost Has Changed. Has the Property Sum Insured?

A property schedule may be renewed with last year’s values plus a small percentage. Meanwhile, material, labour, freight and professional costs may have moved differently, and new fit-outs may never have reached the asset register.

The insurance value should reflect the basis required by the policy, not the price for which the land and building might be sold.

Break the value into components

Separate buildings, plant, machinery, furniture, stock and other contents. Include installation, freight, duties, debris-related costs or professional fees where the policy basis calls for them.

• Add capital projects completed during the year.
• Remove disposed assets only after confirming records.
• Test imported equipment against currency movement.
• Review peak stock rather than a convenient average.

Involve the people who know replacement lead times

Finance knows book values, but engineering and procurement often know what replacement would actually cost and how long it would take. Use both perspectives at renewal.

The practical takeaway

A sum insured is not a number to carry forward automatically. Rebuild it from current assets and the policy basis, then document how you arrived there.

Coverage, exclusions, limits and claim requirements vary by insurer and policy. Read the customer information sheet and policy wording before you buy or renew.