19 December 2023
A Guide To Avoiding House Underinsurance
A Guide To Avoiding House Underinsurance
Allianz discounts for Synergy Credit Union members
Home insurance is an essential part of protecting your property and belongings from unforeseen events like fires, floods, and theft. However, it's important to make sure you have the right amount of cover to ensure you're adequately protected.
Make sure you check out Synergy Credit Union members discount for home insurance HERE
What is Underinsurance?
Underinsurance occurs when your home insurance policy doesn't cover the full rebuilding cost of your home or the full replacement cost of your belongings. This can lead to a significant financial burden if you experience a loss, as your insurer may only pay a portion of the claim.
Here Is an example of partial damage to a home and how it may affect your cover:
Let's say John insured his home with a buildings sum insured of €200,000. Unfortunately, a fire caused €100,000 worth of damage to his home. During the investigation, it was discovered that the actual rebuild cost of her home was €400,000.
Since John’s sum insured was lower than the actual rebuild cost, the Condition of Average was applied. This means that John's insurer would only pay 50% of the claim, which is €50,000.
In this case, John would have to pay the remaining €50,000 out of his own pocket to cover the full cost of repairs.
This example illustrates the importance of having the right amount of insurance coverage to protect yourself from financial losses in case of an incident.
How to Avoid Underinsurance
To avoid underinsurance, there are a few key things you can do:
Calculate your rebuilding costs accurately. Don't rely on market value to determine your rebuilding costs. Instead, use a professional property rebuild costing service or the Society of Chartered Surveyors Ireland (SCSI)'s rebuild cost estimator tool. You can find a link to the tool HERE
Incorporate the extra costs of rebuilding into your calculations. This includes the cost of removing debris, professional fees, and complying with building regulations.
Factor in the cost of domestic outbuildings, garages, driveways, boundary walls, fences, hedges, paths, patios, or decking. These items are often overlooked when calculating rebuilding costs.
Review your sums insured regularly. Check your sums insured at least once a year to ensure they reflect the current value of your property and belongings.
Consider your property's unique features. If your home is a listed building, has a high-quality construction, or has eco-friendly features, your rebuilding costs may be higher.
Understand your policy details and limits. Make sure you're familiar with your policy's exclusions, inclusions, maximum claim limits, and any other terms or conditions.
Address any recent renovations or extensions. If you've made significant changes to your home, your existing coverage may no longer be sufficient.
Don't underestimate the value of your contents. Take an inventory of your belongings and calculate the cost to replace them all as new.
Consider additional cover for items away from home. If you travel with your personal belongings, it's worth taking out additional All Risks cover.
Contact your insurer for guidance. If you're unsure about your sums insured or have any questions about your policy, don't hesitate to contact your insurer.
Preventing Underinsurance: A Smart Investment
Taking the time to understand and avoid underinsurance is a wise investment in protecting your home and peace of mind. By having the right amount of coverage, you can rest assured that you're financially prepared for any unexpected events.
Contact Synergy Credit Union for Home Insurance
At Synergy Credit Unions, we're committed to providing our members with comprehensive home insurance solutions that meet their specific needs.
We are thrilled to partner with Allianz to bring Home, Car and Pet insurance offers to our members.
Allianz has decades of experience in providing car, home and pet insurance products and have already earned the trust of over 500,000 customers in Ireland.
See our website HERE for more information on how you can get up to 18% discount on your insurance needs for home , Car and Pet.
Freephone 1800 2672927 to talk to a member of staff or Click HERE to Get a Quote.