Is your home adequately insured?
Something that comes up regularly in our offices when we talk to new customers, is that often they have not reviewed their “Sums Insured” or the value of their home in their insurance policy for many years. For many consumers, the answer is often No it is not adequately insured.... so below we have a few key tips to help you get it right!
How do I get the right Rebuilding Costs?
House rebuilding costs have increased by 7.3% nationally over last 18 months. It is advisable to review your buildings sum insured annually with your broker to make sure it is right. What many people don’t know, is that you insure your home for the ‘reinstatement’ value and not the ‘market’ value. Remember you need to include allowance for your gardens, outbuildings, walls, paths, demolition & site clearance costs, allowance for inflation, professional fees that might apply such as architects, engineers in the event of a full loss, such as a fire.
What happens if I under Insure?
To ensure a fair system whereby people pay proportionately for the risk for their house, Insurers can reduce the amount of your claim settlement, if you have underinsured by a large margin. This is called applying “Average”. If it is inadvertent under-insurance and not significant it may be overlooked, and certainly with the help of a good broker you would get help in this situation. However in the event of a “partial loss” (say a kitchen fire) if you are underinsured, you might be surprised to have your claim reduced due to underinsurance. For instance, if the rebuild cost of your home is €280K and you only have it insured for €210K, in the event of a catastrophic event such as a fire, you will be facing a shortfall of €70K. However, what a lot of homeowners don’t realise is that if in that situation there was a partial loss, which cost €80K to repair, the insured party would only receive €60K and face a shortfall of €20K. This is because the homeowner in question has only insured their property to three quarters of its rebuilding cost. The greater the level of underinsurance, the greater the impact.
Practical Advice for Insuring your Home
For a very basic rule of thumb, detached homes outside of Dublin should be valued at around €160 - €175 per foot. Depending on the quality of the build it could be more, for instance period properties would be considerably more. Also it’s important that homeowners reassess their cover to take account of any changes such as improvements to the house, like home office extensions, attic conversions etc. While premiums may rise as a result of these rebuilding cost increases it is far better to have it correctly insured than to get a shock later on! As your broker, we are here to shop around and obtain the most competitive deal on your behalf using our panel of over 20 Insurers and help you navigate through all of the information required to ensure you are adequately insured and obtain the best policy for your needs. Call our Household Team on 071 9620193 or email us here to get advice on Home Insurance.