Avoiding Under Insurance – Valuing your Property
Avoiding Under Insurance when valuing your home is imperative.
Throughout my time as an insurance loss assessor, I have encountered many homes which have been grossly under insured.
Often not an intentional money saving scheme, but as a result of not having the tools to calculate correctly.
Calculating your insurance premium
When insuring your home, your property should be insured for its REBUILD VALUE. Quite often, the property is mistakenly insured for the RESALE VALUE.
This in turn leaves the homeowner under insured by up to 50% in some cases.
In making an insurance claim, for example –
A home is insured for a resale value of €150,000
The insurance companies Loss Adjuster states the home should be insured for a sum of €300,000 leaving the home 50% underinsured.
As the policy is subject to the “AVERAGE CLAUSE”
- House fire damage assessed as costing €80,000
- 50% deduction applied by Insurance Company – €40,000
- Payment left to repair your home €40,000
Underinsurance has cost the homeowner €40,000 of their entitled payout!!!
Reducing the cost of your annual insurance premium by minimising the value of your property may save you €50.00 in the short term. However this could cost you thousands in the long run in the event of making a home insurance claim.
What is the “AVERAGE” clause in your insurance policy?
The “AVERAGE” clause in your insurance policy means that the homeowner must insure the full value of their buildings and contents. A claims settlement may be reduced if the sums insured, at the time of any loss or damage, are less than the full value.
If the sum insured is less than the full value of the buildings or contents at the time loss or damage occurs, then the insured person shall be responsible for a part of their loss.
What is included in my Home Insurance Rebuild Value?
In layman’s terms, your buildings sum insured (the amount of your properties rebuild value) should include the following:
- the dwelling
- domestic garages
- boundary walls
Confused?! We can help.
When it comes to calculating the rebuild value of your home the SCSI – Society of Chartered Surveyors Ireland have this handy tool, the HOUSE REBUILD CALCULATOR available on their website. A guide to what the average cost of your rebuild value would be.
However, the SCSI do advise the following:
“Please note that the Guide to House Rebuilding Costs for Insurance Purposes 2022 assists homeowners to insure their homes. The figures are guidelines based on speculatively built homes (housing estate homes). We recommend that you treat the figure provided within the calculator as a minimum for which you should insure the structure of your home. The guide is not intended for use for one-off properties.”
I still don’t know what to do..
That’s ok!!!! Insurance can be confusing.
If there is anything we can do to assist in your underinsurance queries, give us a call.
You can find us at:
- Claims Assist Ireland
- phone our Head Office on 0818 929 555
- call John on 087 165 0950.