Insurance Encyclopaedia

Total loss

A total loss happens when your insured house is so damaged by an insured event that it can not be repaired.

How does the insurer decide if your claim is a total loss?

After you’ve claimed, an assessor is sent out to check out the loss and determine how much it will cost to make things right. If it is found that your house has been damaged beyond repair and needs to be rebuilt, it will be declared a total loss.

What do I get paid if my insured house is destroyed?

If your claim is approved and your insurer determines that your house is unrecoverable you will be entitled to a pay out of your full sum insured, ie. the total amount needed to rebuild your home from scratch.

How much should I insure my house for?

You need to insure your house for the amount that it will cost you, at the time of the claim, to rebuild it with new materials, including fixtures like tiles, carpets, cupboards, built-in appliances and light fittings. You also need to include the cost of any outbuildings and other construction on your yard like pools, walls, etc. Rebuilding your house involves more than the building costs. So make sure that you also include the cost of the following in your insured value: • Making the site safe immediately following a total loss; • Demolishing and removing the remains; and • Professional and municipal fees.