When it comes to home insurance, making sure your coverage is up-to-date with today’s rebuilding and replacement costs is vital.
Whether you’re renewing an existing policy or insuring your home for the first time, it’s essential to have an accurate figure that reflects what it would cost to replace your home and its contents right now.
The Financial Risk of Underinsuring Your Home
The financial risk of underinsuring your home can be significant. For example, imagine if your home has a full rebuild cost of €400,000, but you’re only insured for €200,000. In this case, you’re only 50% insured.
Now, if there’s a partial claim for €50,000, your payout would be halved to €25,000, leaving you to cover the remaining €25,000 out of your own pocket.
In an even worse scenario, if a fire were to destroy the entire house, your maximum payout would be capped at €200,000.
Covering 50% of a full rebuild could place a huge financial burden on your family, leading to situations where people might need to seek loans, extra mortgages, or even consider selling their property.
Why Underinsurance is a Growing Concern
Underinsurance is becoming more common due to rising inflation and an increase in construction and labour costs.
The Society of Chartered Surveyors Ireland (SCSI) recently released an updated rebuild guide, showing an average increase of 28% in rebuilding costs since their last guide.
For some parts of Ireland, rebuild costs have soared over 40% due to material costs, labour shortages, and updates in building regulations.
Could You Be at Risk of Underinsurance?
If your coverage has been the same for years or you’ve recently made home improvements, it might be time for an update. Don’t panic! Instead, follow these 2 easy steps to ensure you’re properly covered:
1. Review Your Coverage Annually
It’s a good idea to check your home’s valuation at least once a year. Updating your cover regularly ensures it reflects any changes in rebuild costs and keeps you fully protected.
2. Account for Renovations and Improvements
If you’ve had work done – a new kitchen, an extension, or other improvements – make sure your policy covers these updates. Renovations can significantly increase your home’s value, so it’s vital your insurance reflects this.
How to Calculate Your Home’s Rebuild and Contents Value Accurately
Use these steps to determine the right cover for your home, including buildings, fixtures, and contents:
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Buildings Cover
The SCSI offers a handy rebuild calculator to help assess your property’s value. You can also consult local professionals for a more tailored valuation if needed.
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Fixtures and Fittings
Don’t forget to include all fixed elements when calculating your home’s rebuild cost. These include:
○ Fitted kitchens
○ Bathroom fixtures
○ Built-in wardrobes
○ Conservatories
○ Added garages
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Contents Cover
To make sure all your belongings are covered, conduct a thorough inventory of your home’s contents:
○ Room-by-Room Inventory: List all items in each room, such as furniture, electronics, and personal belongings.
○ Replacement Values: Calculate the current replacement cost for each item.
○ Total Valuation: Add everything up to clearly understand the value of your home contents.
Need to Update Your Policy? Here’s How!
If you’ve reviewed your home’s valuation and need to make changes, it’s easy with My123. Here’s what to do:
1. Log into My123
Head to your My123 portal and update your cover with the new rebuild cost and total contents cover amount.
2. Submit Your Update
Once you’ve entered your updated figures, submit the changes. If there’s any adjustment to your premium, we’ll let you know. If there’s no additional cost, you’ll receive a confirmation email or letter within 3-5 working days.
3. Not Insured with 123.ie Yet?
If you’re looking for cover, get a home insurance quote here with 123.ie. We’re here to help you find the right coverage without the stress.
More Information and Support
If you have questions about insuring your home correctly, don’t hesitate to get in touch. Our team is here to help make sure you’re covered so you can rest easy knowing you’re protected.
