So if the cost of rebuilding your home or replacing your business asset is €200,000 and you were only insured for €100,000, when your office, factory or house burns down, you will only be paid €50,000, as the insurance company assumes that you were taking the risk yourself for the other 50% of the asset value.

In the case of a business, if you have underestimated the losses from a trade disruption, your insurance claim settlement may be insufficient to rebuild your business and start trading again.

When you take out an insurance policy, never underestimate the rebuilding cost of your property to lower your premiums. You will just receive a much smaller compensation in case of loss. This is particularly important for businesses. Your total Sum Insured needs to include the value of your potential trading losses, supply chain disruption, the value of your stock, and potential devaluation of your business.

For the sake of saving a couple of Euros on your insurance premium, you are putting yourself at a major risk of losing a lot of money in case of any damage to your property.