Research conducted by Peopl.ie insurance has found gaps of up to €35,000 in home insurance cover for ordinary households. As such, homeowners are exposing themselves to huge risks if they need to make an insurance claim.
Peopl.ie compared sums insured on the properties of their clients with average rebuild costs calculated by the Society of Chartered Surveyors Ireland (SCSI) on similar properties. It established that homeowners are undervaluing the sums insured on their cover by an average of around 18pc.
It found that people are “low-balling” what their home cover needs to be, prompting Chief executive of Peopl.ie Paul Walsh to warn that the gap in cover will impact hundreds, if not thousands, of homeowners.
“When we looked at our own database and compared the ‘sum insured’ on a two-bed home in Dublin with the cost of rebuilding that same property, we saw that policy holders were massively underinsuring their homes – by as much €35,000.”
The insurer ran similar comparisons for three and four-bed properties and found large cover gaps on the three-bed homes and lesser gaps on the four-bed homes.
“This is an easy mistake to make. We can see how people might arrive at a lower sum insured than is necessary,” he commented, adding that homeowners might not have reviewed their property in a number of years, or they just used the SCSI average when they purchased their property and have not updated their policy to reflect the changes in building and construction costs in the intervening years.
He also drew attention to the need to reflect the value of extensions or refurbishments in the sum insured on their property, as this should be factored in when calculating your home insurance.
Walsh concluded that, “Claims are awarded on a pro-rata basis, so if you have knowingly or unknowingly undervalued your house insurers will only pay out the amount for which you valued your property As it is the rebuild cost that determines the amount your house is insured for, it is vital that you keep your policy up to date with current rebuild costs.”