Underinsurance leaves many financially vulnerable - Brendan O’Connor
Thousands of homeowners in Ireland do not have an adequate home insurance policy in place to cover their rebuild costs in the event of a claim.
As inflation in the construction sector continues to rise more and more homeowners are being left financially exposed due to being underinsured.
Daragh Cassidy, Head of Communications at bonkers.ie appeared on Brendan O’Connor's show to discuss why so many homeowners are vulnerable to large rebuild costs as a result of being underinsured.
Listen back to the interview above or read over the main points discussed below.
Main points from the interview
- Currently, inflation in Ireland is over 8% however construction inflation is probably running in excess of that.
- This means that if your home burns down and has to be rebuilt, the cost to do this has increased dramatically, as a result, a lot of people have unknowingly left their homes underinsured.
- For example, if your home costs €500,000 to rebuild but you’ve only insured your home for €250,000, you’re only 50% insured. Or if your kitchen needs to be replaced due to a fire, and the kitchen costs €50,000, you’ll only get 50% of that.
- Every year when you are renewing your home insurance policy you must review it to ensure your home is fully insured.
- It’s also important to keep in mind that if you have made any improvements to your home during the year such as buying new windows or getting an extension put in, then you will need to revalue your home.
- You also want to avoid over-insuring your home. This often happens due to people insuring their home for the price they purchased it for, rather than its rebuild cost.
- According to Daragh, up to 20% of those listening to the show are probably over-insured while another 20% are underinsured.
- The Society of Chartered Surveyors has a free online tool which will help you calculate the rebuild cost of your home.
- When renewing your policy, chat to your insurer and go through all the changes made to your home, especially if you have increased your home’s security measures as it could help lower the cost of your home insurance bill.
- Building insurance is compulsory and you’ll need it to take out a mortgage. It covers the cost of rebuilding or repairing your home if anything were to happen.
- Contents insurance is not compulsory but it is advised. It covers the contents in the home such as furniture, blinds etc.
- If you are in an apartment you will only need contents insurance as the buildings insurance will be covered under the apartment blocks cover.
- Specified items cover is insurance for items that you call out to the insured. As a general rule of thumb, Daragh suggests getting this cover for any item that costs over €1,000 in your home. This could be a bike, an engagement ring, a laptop or hearing aids, for example.
- The benefit of specified items cover is that you can take the item such as a phone outside of your home.
- You need to get familiar with the terms and conditions because there are certain situations which will mean your items are not covered.
- Home insurance policyholders should keep in mind that if it's found that you haven’t been maintaining your home then your insurance claim could be invalidated.
Helpful home insurance guides
If you’d like to learn more about taking out home insurance on bonkers.ie then take a look at our home insurance guide series.
- In our Quickstart Guide, you’ll find a complete outline and a brief overview of all the guides in our series
- In this guide, we’ve compiled a list of the most common questions asked about home insurance.
- Before taking out your policy, have a look at these 9 things to consider when taking out home insurance.