House Insurance Pitfall

luque

Over Xmas we had a burst pipe. The main damage was to the kitchen ceiling and some units. Estimates for repair come to €4500.
The value we had on the building was €193,000, which we thought was adequate, but the assessor says it should be €333,000. This means that that they say we are underinsured by some 60%. So they are only going to pay out 60%, €2700. Then, of course, they take off the excess, €1500. So we end up getting €1200 off them.
We are not happy.
But, it could be worse.
Say the whole house had burnt down.
It would not matter if cost of rebuild was €100,000 or €300,000 , they would only payout 60% , then we really would be in bother.
I suppose the lesson is that it is really important to have a good valuation on your house, one that the insurance company is happy with. See www.scs.ie
I'm posting this as a warning to others, but any advice will be welcomed.

moonshadow

Hi Luque,was that the insurance company accessor or your own private one.If not your own one if i were you i would contact a private accessor to work directly for you and negotiate your claim.
Im not an accessor,dont work in insurance but am a builder with 30yrs experience and i have completed many many insurance re fit jobs,get a guy working for you,they generally take about 8% of total claim as their fee.
Best of luck.

ravima

it the house was burned to the ground - a total loss - the insurers would have paid out the €193K

luque

OK guys, thanks for the input. Time to get myself an assessor I think. Thanks again

benny306

Hi,

This is called the 'Average Clause'. As a broker, as far as I know, every insurance company has this built into their policies with the exception of RSA's Safehome Policy (however the underwriters will require sf footage and if they're not satisfied they will apply what they call their 'underinsurance clause')

As the average clause states - 'If, at the time of loss or damage, your buildings/contents are worth more than the declared sum insured, we will reduce the amount we will pay in proportion.'

So if you're insured for €200,000 and the actual rebuild cost is €300,000 and your house were to burn to the ground you only get €133,333.33

The issue for you would be 'what is the actual rebuild cost of your home?'. If it's €193,000 or close to that then I would challange the claim settlement. Check the society of chartered surveyors website as moonshadow says. If you can provide evidence that shows it would only cost approx €200,000 to rebuild your house then you have a good chance of getting a better settlement. Or a private assessor could help you out as well.

ravima

Benny: you are wrong.

average is sum insured/value at risk x claim =

Therefore 200K/300K x 300K (as total loss) = 300K.

If however, the loss was 250K, then you would have a problem as you would only get €166K.

moral if the story is to keep sums insured up to date or else burn to the ground, which is not an easy thing to do if fire brigade is close at hand!!!!!!!

benny306

Thanks for the correction.

Average only comes into effect if you suffer a partial loss.

So the moral of the story as Ravima said is burn it all down or keep the sums insured up to date.

ravima

.......................and then instead of getting a cheque, you get 12 years+!

luque

Hi People. If you go to www.scs.ie and read the guide to house rebuilding costs, section Average Clause: Unless your property is insured adequately, you may be penalised under your policy by having to pay a certain proportion of the reinstatement costs. It is therefore extremely important to have the property sufficiently insured. Where, for example, the insured sum is only 75% of the total reinstatement cost, you will only receive 75% of the agreed cost of reinstatement, whether the claim is made for partial replacement or total loss. For example, in the case of a house insured for €270,000, where the total reinstatement cost was €360,000, the insured party would receive only €270,000 to reinstate the house in the event of the total loss. The insured party would thus be obliged to provide the balance of €90,000. so even total loss you only get a percentage if you're underinsured.

oldyouth

benny306 wrote: »

Thanks for the correction.

Average only comes into effect if you suffer a partial loss.

So the moral of the story as Ravima said is burn it all down or keep the sums insured up to date.

Wrong comment. Average is in place at all times. If you have a total loss, the maximum you get is the sum insured, which is still subject to the calculation Ravima explained