House Insurance Valuation

Vas_Guy

I resently got my house remortguaged and the bank got an auctioneer to value the house, he valued the house at 250k and he estimated the house insurance at 165k, that means that if my house burned down in the morning I would not recover my loss, I would be 30k out of pocket.

Why would he underestimate the value of the house insurance? I

gibo_ie

It doesnt matter how much your house is worth for insurance. It is the "Rebuild" cost you need to provide to the insurance company and in your case 165 which would seem about right for an average house in my opinion. Dont forget you need to add contents also. Also on average the rebuild price should go up 10-15% a year but most of the time the insurance company takes this into account but do check!
Good Luck
M

The_Conductor

Yup- sounds about right.
One thing to remember is that contents insurance is an entirely different package- and is normally sold seperately. So, despite the fact that you have house insurance, you may very well need to purchase seperate insurance for contents (possibly elsewhere).

Shane

Victor

If your house burns to the ground, you still have a site where you can build a replacement house.

Read here: http://www.scs.ie/publication/hri.asp

Vas_Guy

Thanks for explaining it in detail.

Jo King

It may well be worth your while to insure for market value. If the site became contaminated, by a chemical spill, for example, then you would have the option of moving to another similar house. If an oil tank leaks, the cost of undoing the damage could be much greater than the cost of rebuilding the house.

The_Conductor

Jo King wrote:

It may well be worth your while to insure for market value. If the site became contaminated, by a chemical spill, for example, then you would have the option of moving to another similar house. If an oil tank leaks, the cost of undoing the damage could be much greater than the cost of rebuilding the house.

Insurance companies will only ever pay for the cost of rebuilding an abode, not the cost of purchasing a similar abode elsewhere- irrespective of what you specify the value of your house is. You may be able to get additional hazards specified on your policy, however a lot of them would probably end up under the catch all "Force Majeure" heading, which inevitably unless they are specified are not covered.

S.

Jo King

smccarrick wrote:

Insurance companies will only ever pay for the cost of rebuilding an abode, not the cost of purchasing a similar abode elsewhere- irrespective of what you specify the value of your house is. You may be able to get additional hazards specified on your policy, however a lot of them would probably end up under the catch all "Force Majeure" heading, which inevitably unless they are specified are not covered.

S.

Insurance will pay out the lower of :1. the cost of reinstating the house or 2. the market value up to the amount of cover in the policy. There are numerous claims resulting from leaking oil tanks. The insurance companies pay up on normal household policies. They will always insist on the lower cost option. If your insurance is not sufficient to cover the cost of decontamination and re-instatement then you are screwed. they will write a cheque for the amount of your cover and leave you there. I know someone who suffered badly in such a situation.

Victor

Jo King wrote:

If an oil tank leaks, the cost of undoing the damage could be much greater than the cost of rebuilding the house.

Such an event is covered under the occupiers liability part of the policy, no the reinstatement part.

Jo King

Occupiers liability applies to claims from third parties. Re-building includes all mediation works on the site in preparation for re-building.