Is your Home Under Insured?

According to the Association of British Insurers’ guide on buildings and contents insurance, research shows that one in five households could be underinsured. Whilst we don’t have any similar report in Ireland, work by the Central Bank of Ireland indicates a similar trend, with Central Bank data from 2022 suggesting that 16.5% of Irish homes were underinsured (up from 6.5% in 2017). Underinsurance can cause serious problems if you have to make an insurance claim, as parties under insure are at risk of being penalised in the amount they can recover.

What is Under-Insurance on your Home?

Simply put, underinsurance is when you insure your home for less than the cost to rebuild or repair damage to your home, or the cost of replacing the contents of your home. To avoid being underinsured, homeowners should insure their property for its full rebuild cost, i.e. the full cost of rebuilding your home from scratch. Otherwise, if you do make a claim on your home insurance, you may not receive the full amount to cover any repairs or rebuild costs. 

As noted by the Central Bank, the increased cost of living has also generally led to a rise in the cost of building materials and building work. And because of these extra costs, there is a risk of homeowners being under-insured.  

How can I avoid my home being Under-Insured?

To avoid being underinsured, you should review your buildings and contents cover on a fairly regular basis, and when you’re at renewal time. Don’t just focus on the cost of your home insurance premium, look at the level of cover you’re receiving and make sure it’s right for you. 

Some of the reasons to review your home insurance (building and contents cover) might include:

• When you undertake any home improvements (i.e. a new kitchen or bathroom)
• When you build an extension
• When prices increase

If you haven’t updated your policy or reviewed your rebuild costs in a while, it might be a good idea to look at the rebuild value and contents value you are insured for. 

Make sure your home is not under-insured:

Count the cost of a rebuild – for buildings, this means the full cost of rebuilding the home, including fixtures and fittings, any outbuildings and external structures like walls and fences, plus an amount for any extra charges that could be involved in rebuilding such as demolition costs, architects’ and surveyors’ fees and meeting the requirements of local authorities. The Society of Chartered Surveyors of Ireland has a useful guide to house rebuilding costs.

Contents

It’s easy to underestimate the value of household contents and possessions. The sum insured should reflect the full cost of replacing all the belongings within the home at current prices.

Check that all personal effects are covered

This means replacing new items covered. It is worth noting that gold has risen 500% in 10 years while silver has risen an astonishing 900% in the same period, so it is important that up-to-date valuations are retained for all the items covered.

Annual Review

It’s usually a good idea to review your buildings and contents insurance coverage at least once a year. If you are looking for home insurance cover, why not contact us at 01 409 2600 to discuss your options or on our quick quote section to get a quote online?