Bedroom and post code based assessment of building insurance are often offered through on-line insurers. These type of policy offer a block policy which would cover similar properties in a particular area or post code. They can be fairly inflexible with a pre-defined maximum sum insured based upon bedroom number and location.
However, the actual amount paid out on a claim would be subject to claims assessment should anything happen and it is the claims assessor’s opinion as to what your property is worth irrespective of the maximum sum insured quoted.
Building insurance based on a rebuild or re-instatement value will allow a tailored policy reflecting an accurate amount of cover to be the defined sum insured and an annual premium calculated on that exact sum. Hopefully you do not therefore pay for any more insurance that you need and cover can be index linked so as to allow the tracking of house price increases. A more tailored policy can also allow for the inclusion of extensions and alterations to the property to be included, which could be missed on a one size fits all block policy.
So, in conclusion, bedroom rating can be cheaper and easier to put in place but on balance it may prove beneficial in the end to go down the stated sum insured route. Insurance, after all, is supposed to be about peace of mind.
Andrew Fowler worked for Limetree Financial Services until December 2010. Feel free to contact another member of our team for help or advice.