Can the bank or lender have the sum insured increased to higher than the replacement value?

Yes, because the lender or bank was authorized by the owner/borrower in terms of their loan agreement between them. The owner has effectively given the bank power of attorney to act on their behalf in these matters. The trustees of the body corporate are obliged in terms of legislation to insure the buildings and all improvements to full replacement value. The “market value” and/or “mortgage bond value” is likely to differ sharply, either way. For this reason, the bankers / lenders usually request confirmation of cover for the sum of the loan to cover their interests.