Make sure you do not underinsure your home.
If you are renewing your home insurance policy or if you are taking out a home insurance policy for the first time, it is vital that you insure your home and contents at an accurate amount reflective of today’s building and contents replacement costs.
The financial consequence of underinsuring your home could be devastating. For example, where a house with a full rebuild cost of €400k is insured for €200k, (only 50% insured). If there was a claim for partial damage, say €50k, then only half of that claim would be paid, equalling €25k. So, you would have to cover the other 50% (€25k) from your own pocket.
An even worse situation would be if the above house was fully destroyed, say in a fire; then the maximum amount that would be paid out would only be €200k. Having to cover 50% of a total rebuild would come at a huge financial cost, so high, that many people would be unable to pay this. This could result in having to apply for mortgages, loans or being forced to completely give up their property.
The issue of underinsurance has become a problem due to rising inflation coupled with increased construction and labour costs.
The Society of Chartered Surveyors Ireland (SCSI) has recently updated their guide on the rebuilding value of homes, which shows an increase of 28% on average since their last published rebuilding guide. For some regions/house types in Ireland, the increases have been over 40%. These figures reflect the much higher rebuilding cost due to increases in materials and labour but also reflect higher costs that are now associated with the latest building regulations and specifications required.
Circumstances that could mean you are at risk of underinsurance:
Some people insured their home years ago when building costs were a lot lower and have not changed the cover in years- this leaves them at risk for under insurance.
Don’t panic, just make sure you are insured for the correct amount by following these easy steps:
- Make sure you do an evaluation at least once a year.
- If you have a change in circumstance (like a renovation or home improvements), make sure you take this into consideration and update your home insurance cover immediately.
- When doing your valuation, here’s how to correctly (and accurately) determine the replacement value of the building, the fixtures and fittings, and the contents:
Buildings cover:
- The Society of Chartered Surveyors Ireland (SCSI) offers resources such as a rebuild calculator to help homeowners accurately assess their property values.
- You can sense check this by using local professionals to assist in determining the appropriate rebuild value.
Fixtures and fittings:
When calculating the rebuild cost of your home, it is essential to include all fixed elements such as:
- Fitted Kitchens
- Bathroom Fixtures
- Built-in Wardrobes
- Conservatories
- Added Garages
Contents Cover:
Conduct a thorough inventory of your home contents, estimating the replacement value of each item. This should include all removable items such as furniture, electronics, and personal belongings. Accurately valuing your home contents involves a detailed and methodical approach:
- Room-by-Room Inventory: Go through each room and list all removable items, such as furniture, electronics, and personal items.
- Estimate Replacement Values: Calculate the cost to replace each item at current market prices.
- Total Valuation: Sum the values of all items to determine the total value of your home contents.
Once you have done a total valuation on your building, fixtures and contents insurance, get in touch to update your policy:
- Login to the My123 portal to update your cover.
- Enter your new home rebuild cost (including fittings and fixtures).
- Enter your new home contents cover cost.
- Any change to your premium will be communicated to you at your preferred date and time, if there is no cost, you will simply receive a response within 3-5 working days of your request by email or post.
- If you do not yet have a 123.ie Home Insurance Policy, click here to get a quote today.
For more information on correctly insuring your home, click here.