Finance glossary
Sum Insured
Also known as: Sum assured, Amount insured
In simple terms
The sum insured is the most your insurer will pay out on a claim. If it is set too low, you could be left short when something goes wrong.
On this page
What does sum insured mean?
The sum insured is the maximum amount your policy will pay for a covered loss. On buildings insurance it is the cost of rebuilding your home; on contents it is the total value of your belongings; on life insurance the equivalent is the “sum assured”.
It is the ceiling on any payout, so getting it right matters.
How the sum insured works
You usually set the sum insured when you take out the policy, based on rebuild cost or the value of what you own. If a claim exceeds it, you bear the excess loss yourself.
If you under-insure, some insurers apply “average”, reducing a payout in proportion to how much you were under-covered — so a partial loss might only be partly paid.
How could this affect me?
Setting the sum insured too low to save on premiums can backfire badly at claim time. Setting it realistically — and reviewing it after improvements or big purchases — keeps you properly protected.
For buildings, use the rebuild cost (not the market value), which a surveyor or a rebuild calculator can help you estimate.
Things to watch out for
- Under-insuring can trigger “average”, cutting even partial-loss payouts.
- For buildings, insure for rebuild cost, not market value.
- Review the figure after renovations or major purchases.
General information, not personal advice
Consumer Credit is an independent information service. We do not provide regulated financial advice or sell financial products. For advice on your own situation, speak to an appropriately authorised firm or a free service such as MoneyHelper. About Consumer Credit.
Sources
We checked this page against these official and authoritative sources.
- ABI, Buildings and contents insurance (opens in a new tab). Accessed 22 Aug 2026.