Home insurance rebuild figure

xraylady

When taking out insurance to cover house rebuild costs, can you over-value? What I mean is, if you have house insured for 600k rebuild and it only actually costs 400k to re build exactly what was there, is that all they will give or do they give you 600k to build what you like? Just curious. Don’t want to waste my money by not being accurate. I think with car insurance, there’s a max they’ll pay out whatever value you’ve insured car for.

Eggs For Dinner

You get what it costs to rebuild your home, including legal / architect fees, temporary accommodation etc. up to a maximum of your sum insured.

If you over insure, you are paying too much premium. If you under insure, it can cost you 10's of thousands in the event of a claim, even for partial damage

Very hard to get it right these days with significant increases in building costs, but better to over than under insure

Boardnashea

Am I right in saying that if you underinsure by 20% then the max that will be paid out is 80% of the sum insured? Best to get it right.

https://scsi.ie/consumer/build/house-rebuild-calculator/?gclid=CjwKCAjwj42UBhAAEiwACIhADnmOAz5lDBPE8Aji04_vbA9oM6N8DYCixI0eqKkftJD__4CTPQZ3FhoClFEQAvD_BwE

MikeCairo78

https://www.boards.ie/discussion/comment/119076091#Comment_119076091

Yes the principle of average applies - payment for any damage or any loss will be in proportion to the value insured. Ie if sum insured should be €100,000 but insured at a figure of €50,000, Insurer will deem to be on cover for 50% of risk and any claim payment will be adjusted by this.

Eggs For Dinner

The principle also applies to partial claims, so if you have something like a burst pipe causing €5k worth of damage, you would only get €4k in settlement if you only insure for 80% of the rebuild cost

Allinall

https://www.boards.ie/discussion/comment/119078965#Comment_119078965

Is that really true?

That would mean for any small claim, there would have to be a full costing done on a rebuild to establish whether it was underinsured?

Victor

The usual test regarding an average clause would be how reasonable your original estimation of reconstruction cost was at the time of obtaining the policy. If it is within a few per cent, the insurer is unlikely to quibble. If it is out by half, they will.

I'm not sure they would apply the average clause to a claim of €5,000, but they would apply the minimum (the insured has to pay the first €x).

El Gato De Negocios

https://www.boards.ie/discussion/comment/119078971#Comment_119078971

Yes, its true however claims for things like accidental damage eg a broken window or television would not be subject to average clause. Average clause generally will only apply to larger losses that are on the larger side like fires or flooding.

@xraylady if you are getting new quotes ask if the insurer has index linking in place. This basically means that the rebuild values of insured properties increase automatically with inflation. Because there has been such a huge increase in building costs over the last couple of years I have no doubt that there are alot of people under insured through no fault of their own. My suggestion would be when calculating your rebuild cost would be to use the SCSI calculator above and add on an additional 10%. You would also need to factor in the furnishings in the house eg, if you have spent 100k on your kitchen or have high value tiling or fittings throughout. Id always overstate it a little for the simple fact that the extra cost to you in premium would be marginal (a couple of percentage points) but the potential cost to a large loss would be an awful lot more if you are underinsured.

Eggs For Dinner

Insurers can apply the Average Clause to any claim. However, for incidents such as the ones used as examples above, insurers will waive their rights, provided the insured rectifies the situation

I have seen Average applied on claims as low as €2k where there is significant under insurance. It won't be applied generally if you are within 10%