Property Insurance FAQ

As a general guide, how do I estimate the sum insured?

Policyholders of property insurance are advised to ensure that the sum insured reflected in their insurance policies is adequate for rebuilding the property. Using a sum insured which is too low will affect the amount of the payout in a claim. Conversely, having a sum insured which is too high will result in the policyholder paying more premium than necessary. Insurance buyers can seek the assistance of a qualified property valuer or quantity surveyor to help determine the adequate sum insured for their insured property.


Replacement Cost

The sum insured of a property is usually computed on a replacement cost basis, which is the cost to replace (i.e., to reconstruct) the property, and necessary incidental charges like professional and debris removal fees.

Before we calculate the replacement cost of a property, we need to know the Construction Floor Area (CFA) and the construction cost of the property.


Construction Floor Area (CFA)

CFA is the area of all building enclosed covered spaces measured to the outside face of the external walls including covered basement and above ground car park areas. You can obtain the CFA from the developer of your property. A strata-titled property such as condominiums are usually insured for property damage by the MCST under the Building Maintenance and Strata Management Acts 70.


Construction Cost

The construction costs for different types of buildings are usually advised by quantity surveyors or property consultants, which also publish construction cost indicators such as this


Replacement Cost Calculation

The following example provides a simplified approach to replacement cost calculation solely for the purposes of general understanding. Intricacies in the assessment of replacement cost may require professional advice to determine a more accurate replacement cost.

Example: Mr Lim lives in a semi-detached house located in a sub-urban district with a construction floor area (CFA) of 230 square metres. Mr Lim would like to purchase fire insurance for his property and wishes to know an indicative sum with which he can insure his house.



Step 1 - Obtain Construction Floor Area (CFA)

Mr Lim's house has a CFA of 230 square metres.

Step 2 - Select appropriate unit cost from Replacement Cost Table


CFA(square metres) of his semi-detached house


Unit Cost (S$/sq meter)


Estimated Reconstruction cost 230 square metres x S$3,000/square meter

230 square metres

S$3,000/square metres (1)


Step 3 - Add the estimated value of building fixtures and fittings


Estimated amount of



S$25,000 (2)


Step 4 - Add Professional Fees, Demolition and Removal of Debris, Goods & Services Tax (GST)(3)


Professional Fees @ 10% of sub-total (e)


Demolition and Removal of Debris @ 5% of sub-total (e)


Replacement cost excluding GST


GST @ 7%








Estimated Current Replacement Cost Approx.


(1) Note - Average cost/square meter used in this instance.
(2) Note - Value of built-in furniture and fixtures, light and electrical fittings, etc. estimated by owner.
(3) Note - Professional fees for reconstruction work are assumed at 10%, demolition and removal of debris at 5%, and GST at 7%

*Content on this page is not professional advice. You should seek the assistance of a qualified property valuer or quantity surveyor to help determine the adequate sum insured for your insured property.