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.

Understanding Under-Insurance:

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.