Insurance definitions: Sum Insured vs Declared Value (Reinstatement Value)

Below is our simple definition of a concept that often causes confusion - we hope this if of use:

Sum Insured

The sum insured is made up of two elements being a "Declared Value" and an "Inflation Provision".

The Declared Value or Reinstatement Value

The Declared Value is the cost of rebuilding the premises insured on the first day (Day One) of each period of insurance. As long as this figure is adequate on that day any claims will be free of average. If it is inadequate it is possible that average could be applied meaning that any valid claim payout would be proportionally reduced by the amount that the property is deemed underinsured.

The Inflation Provision

This is the percentage uplift designed to cover inflation during the insurance year and during the subsequent period required for designing, planning, tendering and actual reconstruction, however long that might take. This is usually 30% of the Building Declared Value.


Therefore the key figure for obtaining an insurance quotation is the Declared Value / Reinstatement Value. Meanwhile the Sum Insured in more of an arbitrary, but nonetheless important, figure.

Often, over time, the Reinstatement Value of the building moves out of sync with its 'market' level. An insurance re-valuation may be worthwhile, and its cost may be recoverable from the Lessee.

In order to partly adjust for this, we automatically uplift the reinstatement values in line with the inflation level as advised by the RICS (Royal Institute of Chartered Surveyors) each year on renewal. Nevertheless, a reinstatement valuation is normally recommended every 3 years.

If you require a competitive insurance quote for your property, or any further clarification, don't hesitate to get in touch.

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on pinterest
Share on email



Don’t miss out on our opportunities

Advanced Search

Try Selecting Multiple Options to search

Recent Articles:

22 Lockdown Deals Done as opportunistic enquiries surge

In the 3 months since the nationwide lockdown commenced in late March, the Prideview team has dealt with an unexpected …

Read More

Covid-19 debate: Buy now or wait til September?

For anyone looking for investment opportunities, this is the key question of the moment. Listen to these highlights of a …

Read More

Infographic: Pro Tips for Landlords Facing Coronavirus

If you found this useful, check out our full analysis of these issues in our Complete Guide for Landlords Facing …

Read More

Current Opportunities

In Auction
£ 375,000

Vacant Shop & Flat, Feltham, Greater London

98 Harlington Road West, Feltham, Middlesex, TW14 0JJ
Current Opportunity
Call for price

McColl’s & Well Pharmacy, Manchester

183/185 Victoria Avenue, Higher Blackley, Lancashire, M9 0RB
Call for price

Nail Salon, Stanmore, Greater London

7 Buckingham Parade, The Broadway, Stanmore, HA7 4EB
In Auction
£ 2,350,000

Development Site with Planning, Leicester

510 Melton Road, Leicester, Leicestershire, LE4 7SP
Call for price

Gym & Cafe, Liverpool

Lower Ground Floor, Silkhouse Court, 7 – 17 Tithebarn Street, Liverpoool, L2 2DP
Call for price

Heron Foods, Crewe

Heron Foods, site of former Merlin PH, Bradfield Road, Leighton Crewe CW1 3RH
Call for price

Co-op Food, Loughborough

Co-Op KnightThorpe Road, Loughborough, Leicestershire, LE11 4JX
Current Opportunity
£ 1,000,000

Vacant Restaurant & 3 Flats with Development Potential, Newington

53-57 High Street, Newington, Kent, ME9 7JJ
£ 50,000

Vacant (To Let) Retail Unit, Doncaster

Formerly The Factory Shop, Scrooby Road, Harworth, Doncaster, Nottinghamshire, DN11 8JW

Vacant Former Post Office, Pinner, Greater London

Ground Floor Unit, 67 Bridge Street, Pinner, HA5 3JB

The Home of the Blue-Chip Investor

Click the logos below to see relevant investment properties