How do you determine the insured amount for home insurance?

Building insurance is taken out to protect your home from imminent dangers. Fire, a storm or a burglary can damage your house considerably. The tricky part is determining the insured amount. Too low an insured amount results in underinsurance. With too high an amount you pay too much premium. What is the solution here?

For building insurance, the rebuilding value of the house is assumed. The insurer cannot expect you to know what the rebuilding value of the house is. This is because this amount does not correspond to, for example, the WOZ value of the house.

Why does buildings insurance assume the rebuild value?

The rebuild value is the maximum amount the insurer will pay out. In case of burglary, the damage to the house will be limited, but a fire can destroy the entire house. Therefore, the insurer assumes the rebuilding value.

What is the reinstatement value?

The rebuild value is used to determine the amount you need to insure your home for. The reinstatement value is the amount needed to rebuild your home in the same place and manner. Many people hesitate when they see the reinstatement value and wonder whether they are taking out the right building insurance. This is because the reconstruction value is often lower than the value for which they bought the home. This is because the resale value also takes into account the location of the house and the land. Because the location and land are not lost in a fire, you do not need to insure them and they do not count toward the rebuilding value. As a result, the rebuild value is often lower than the resale value.

In addition to the sales value and reinstatement value, there is also the WOZ value. This is largely related to the sales value and also takes the land and the location into account in the calculation. The WOZ value is therefore often higher than the reinstatement value.

How do you find out the rebuilding value of your home?

There are several ways to do this. One common method is to use a so-called rebuild value meter. This asks questions about the house. Based on the answers, an insured amount is determined. A major disadvantage is that these are rather difficult questions. The questions asked include:

• What is the volume of the house in m3? You have to measure exactly because sloping parts of the house do not count or only partly count.
• Depending on the quality of the kitchen, for example, you get a certain percentage by which to increase the outcome of the calculation.
• A conservatory and a thatched roof also provide a percentage increase.

You can also hire an expert to determine the insured amount

Especially for building insurance, you can invite an appraiser to make a calculation for you, but this is not recommended. The cost of the appraisal can run into the hundreds of euros. If you bought the house recently, it was probably appraised for the mortgage on the house. With any luck, there is a rebuilding value in the appraisal report, but often this value is missing.

Choosing building insurance without an insured amount

Filling out a rebuild value meter with an insurance advisor is still doable, but the form raises too many questions for the individual. Insurers have also thought about this. More and more insurers are offering building insurance that no longer includes an insured amount. For example, the rebuilding value is insured up to €750,000. Only if the reconstruction value is presumably higher, an insured amount must still be determined.

Online, insurers offer home insurance without an insured amount. As a result, you are not stuck with determining the insured amount. How convenient!