Warning as rebuild costs fall but cover bills rise
Published 07/04/2010 | 05:00
HOUSEHOLDERS have been warned they may be paying too much for their home insurance, after new figures showed that the cost of rebuilding properties has plummeted.
Figures from the Society of Chartered Surveyors show that the average cost of rebuilding a house across the country has fallen by almost 8pc.
This comes on top of a fall of up to 5pc in the previous year, adding up to a cumulative reduction of 13pc in the cost of rebuilding a house.
Despite this, house-insurance premiums have shot up by 14pc in the past 12 months, according to recent figures from the Financial Regulator.
Premiums are predicted to rise again this year after damage estimated at €500m was caused across the country by floods and ice over the winter.
The regulator has advised householders that they can save hundreds of euro by shopping around for the keenest prices in the insurance market.
Micheal O'Connor of the Society of Chartered Surveyors has recommended that homeowners should ensure these lower rebuild costs are reflected in their premiums.
He said: "This is very good news for homeowners. We would urge them to go to our website, www.scs.ie, before they renew their house insurance or if they want to check that they are paying the appropriate premium.
"Given the current economic climate, everyone is shopping around and looking at ways of cutting down costs. By carrying out this straightforward calculation, people could end up making considerable savings."
The premium for insuring a house is based on the cost of rebuilding it if it is burned down or destroyed in some other event.
The rebuilding cost has nothing to do with the market value of the property if it was to be put up for sale.
Mr O'Connor pointed out that the figures were good news for anyone who was in the unfortunate position of having to rebuild their home and for those planning to build their own home.
The biggest decrease in rebuilding costs was in Dublin, with a drop of 9pc. The cost of rebuilding in the city has fallen since last year by around €186 per square metre.
And the cost of rebuilding a four-bedroom 118sqm (1,270sq ft) detached house with a garage and a high-value kitchen in the capital has fallen from €257,669 to €235,668.
This is a reduction of €186 per square metre, or 8.5pc.
For a similarly sized Cork house, the rebuilding costs have also fallen, from €195,955 to €181,978. This is a drop of €118 a square metre or 7.1pc.
The society has a guide at www.scs.ie, which surveys rebuilding costs for the main house types in five major urban areas -- Dublin, Cork, Galway, Limerick and Waterford.
Asked if the society was underestimating the fall in building costs, Mr O'Connor said the figures reflected averages across the State.
However, he also warned that it was important that homeowners did not underinsure their homes.
If they do, then they will only be able to claim up to the value for which they have the property insured in the event of damage to the building through fire or some other catastrophe.