What does the term "index linked" mean when used with buildings insurance cover?

Answer 1

Index linked normally means that the maximum amount the insurance company will pay for the complete rebuilding of your house if it is destroyed (most often by fire, but it could be a gas explosion or other accident) is linked to an index.

The most common index in the UK is that of the Royal Institution of Chartered Surveyors rebuilding cost index, as in a previous answer. But it might not be, and your policy document will tell you what the index is. It could be the CPI or RPI but most insurers in the UK stick to the more specific index of the RICB.

Your premium is not linked to this index. The insurer will decide what premium to charge each year, and this depends on a lot of factors, one of the most important being competitive pressure. Your premium could go down even if the sum insured has gone up.

Answer 2

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RE :What does the term "index linked" mean when used with buildings insurance cover?
Follow 5 answers

Answer 3

It means linked to the Royal Institution of Chartered Surveyors rebuilding cost index

Answer 4

Rises in parallel with
RPI - Retail Price Index - (ANNUAL Inflation)

or

CPI - Consumer Price Index ( ANNUAL figure based on a typical "basket" of services/commodities)

A sample blurb from a company page:-

Index Linked - family income assurance
Family income assurance in which the assured may, if he or she chooses, increase premiums in line with the retail price index and hence increase the sum assured.

Answer 5

It means the insurance premium can be amplified every year in keeping with the RPI (Retail Price Index).

Answer 6

the amount insured will be index linked to inflation so that in theory you should be covered for rising repair costs, etc