Phone: 01 4979432

Insurance Claim Advice

The Importance of Reviewing Your Sums Insured

Home insurance is split into two parts:-

  1. Buildings insurance
  2. Contents insurance

Buildings insurance is required so that the cost of rebuilding your house is covered in the event that is destroyed. Unfortunately however, it is extremely common that homeowners either completely underestimate how much they think they should insure their house for, or, they are given incorrect advice as to what they should insure for.

Many homeowners also make the mistake of insuring their house for roughly what its market value is. However, this is totally incorrect as your sums insured should be based on what it would take to rebuild your house as new in the event of a fire, flood, earthquake or some other hazard. 

The ramifications of not having your house adequately insured are huge. For instance, god forbid your house is totally destroyed in a fire. If the insurance company find that your house is underinsured, they will apply the insurance principle of average, which makes a reduction to the overall claim pay out, in proportion to the underinsurance. This can result in very high liabilities on the homeowner, the results of which can be ruinous.

Following the downturn in 2008, rebuilding costs fell but have now risen steeply because of higher labour costs and the inflating price of building materials. The Society of chartered Surveyors has recently announced that tender price levels have already risen by 5% to August 2018. As expected, these increases have been more pronounced in Dublin, rather than in places like Limerick, Cork or Galway. As costs rise, if homeowners don’t make the necessary adjustments to their sums insured, then they will not be adequately covered.

For example, a house that costs €200,000 to rebuild might only be insured for €120,000 because the policy hasn’t kept pace with the rising price tag for reinstatement. It is therefore only 60 per cent insured. If a fire breaks out causing €50,000 worth of damage, some insurers will only pay out 60 per cent of the claim, or €30,000.

The Society of Chartered Surveyors Ireland (SCSI) issue a guide on how much it costs to rebuild a standard house per square foot. To work out how much you should insure your house for, you multiply the price per square foot by the floor area of your home. For instance, if your house is 1,100 sq ft, it should cost anywhere from €150-200 per sq ft to rebuild, based on their guide.

However, the SCSI does not take into account the cost of replacing finishing’s such as hardwood timber floors, better-than-average kitchen fittings or built-in wardrobes so if you are unsure as to where your house may fall, do not hesitate to contact us today on 01-4979-432 and we will be able to advise you accordingly.