Our home for most of us, will be our biggest purchase, therefore it is important to insure it correctly.
At renewal stage each year it is important to review your policy, noting the cover in place but also paying particular attention to the building and contents sum insured as it is these sums that can reduce the premium. Recent changes in our economic climate has lead to amongst other things a decrease in building costs & this should be taken into consideration when deciding on your building sum insured. When deciding on this figure it is easy to get confused with the market value of the property and the reinstatement value. Insuring your property using the incorrect value can lead to you being over insured and paying an additional premium but you can also be underinsured and subject to the average clause penalty. Average clause means you the policyholder may have to pay a certain portion of a claim, for example if the sum insured is (deemed by a loss adjuster whilst dealing with a claim) to be only 80% of the correct reinstatement cost, you will only receive 80% of your claim, whether the claim is made for partial or total loss.
In trying to determine the correct building sum insured (reinstatement cost) it will be helpful to bear the following in mind:
In 2017, the Society of Chartered Surveyors Ireland published a “Guide to House Rebuilding Costs for insurance purposes“. It provides a breakdown by county, house type, no. of bedrooms and the square foot of your property, allowing you to estimate the current rebuild value of your property. You can also use their online house rebuilding calculator.
In addition, the report provides an explanation of some commonly used words that can be found in home insurance policy wordings, for example: Market Value, The Average Clause, Index linking, Reinstatement.
If you would like a home insurance or property damage quotation, please call us on 049-4332944, e-mail info@martininsurance.ie or complete our online enquiry form.
Disclaimer: The material contained is this article is for general information purposes only and does not constitute professional advice.
