Householders warned they may be overpaying for home insurance - confusion around valuation and cost of rebuilding
Published 26/07/2016 | 13:24
HOUSEHOLDERS have been warned that many of them may be overpaying for their home insurance.
People are confusing the market value of their home with the cost of rebuilding it.
This means some households are carrying 50pc more insurance cover than they could ever claim, according to the Society of Chartered Surveyors.
Others may not have enough cover in place.
According to a new guide rebuilding costs, there has been a 1.5pc rise in rebuilding costs in Dublin in the last year, with a rise of 2pc in Cork.
However, in Galway, Limerick, North West, North East and Waterford, rebuild values have remained static.
The Society of Chartered Surveyors said its costs around €181,000 to rebuild a three-bed semi-detached house in Dublin.
In contrast, the property could sell for €350,000.
Insuring the property for its sale value would be that the householder would have 50pc more cover than they could claim in the even that it needs to be rebuilt.
At the other end of the country, in Donegal, a three-bed semi could be rebuilt for €117,000, but its market value is around €85,000.
Insuring it for its market value would leave a homeowner seriously under-insured in the event the property is burned down.
Rowena Quinn, of the Society of Chartered Surveyors and managing partner of Hunters Estate Agents, said that she has spoken with clients who were carrying 50pc more home insurance cover than they could ever claim.
They are overpaying on their insurance premium as a result.
Kevin Brady of the surveyors’ society said increases in Dublin and Cork are directly linked to the increase in construction activity seen year-on-year in Dublin and recently in Cork.
Launching an updated guide to rebuilding costs, Mr Brady said: “Having the correct reinstatement value will not only make certain that you are not over or under insuring your property but will also avoid over-payment when it comes to your home insurance premium.”
There has been no significant increase to rebuilding costs since last year, but this is highly unlikely to remain the case in the coming years, as house building activity increases and while skill shortages still exist, the surveyors said.
Homeowners with one-off properties or period houses, Georgian or Victorian, should contact their local chartered quantity surveyor to work out its rebuilding cost for insurance purposes
Consumers can access the free 2016 House Rebuilding Cost Guide and Calculator on the SCSI website – www.scsi.ie