When it comes to safeguarding your most valuable asset, your home, ensuring proper insurance coverage is essential. However, recent findings from the Central Bank reveal a concerning trend of increasing levels of under-insurance in the Irish home insurance market. This blog post aims to shed light on the consequences of under-insuring your property and emphasise the significance of securing adequate coverage.
Under-insurance occurs when the value of your property or its contents is insured for an amount less than the actual cost of rebuilding or replacing them. In such cases, policyholders may face severe financial consequences when filing a claim due to a condition known as average, which limits the amount that can be claimed.
Implications on Claims:
Example of Partial Loss
Imagine insuring the contents of your home for €20,000, while their actual value amounts to €40,000. In this scenario, you are under-insured by 50%. Should your belongings be damaged, destroyed, or stolen, your insurance company will only cover 50% of the total damage, leaving you to bear the remaining costs.
Example of Total Loss:
Consider a situation where the cost to rebuild your house is €400,000, but you have insured it for only €200,000. This means that your home is only 50% insured. In the unfortunate event of a claim for partial damage amounting to €100,000, your insurance payout will be limited to €50,000, as your coverage only corresponds to 50% of the actual rebuilding cost.
How to Avoid Under-Insurance:
- Correctly Estimate Rebuild Cost: It is crucial to assess the cost of rebuilding your home accurately. A useful tool to use during this process is the SCSI’s house rebuild calculator.
- Regular Policy Review: Periodically reviewing your home insurance policy is vital to ensure it reflects any changes or improvements made to your property. Factors such as renovations, extensions, or the acquisition of valuable possessions should be taken into consideration to maintain sufficient coverage.
How We Can Help:
As trusted insurance brokers, we understand the importance of comprehensive coverage for your home. Our team is dedicated to providing expert advice and guiding you towards the most suitable policy tailored to your needs. By working with us, you can rest assured that your property will be adequately protected, minimising the risk of financial burdens during challenging times.
Protecting your home is more than just an investment; it is a fundamental aspect of securing your future. By avoiding under-insurance and partnering with knowledgeable insurance brokers, you can safeguard your property against unforeseen events and ease the financial risks associated with inadequate coverage.
Don’t wait until it’s too late—take the necessary steps today to protect your most valuable asset, your home.