Catastrophic damage to one’s property is a homeowner’s worst nightmare. Home insurance provides a crucial safety net in such situations. However, underinsurance has become a growing concern in Ireland, leaving many victims of building damage facing significant financial losses. In this article, we will delve into the state of underinsurance in Ireland, explore the reasons behind its rise, and provide actionable steps to address this issue.
The Alarming Increase in Underinsurance
According to the Central Bank of Ireland, the percentage of claims paid out in 2021 that fell short of fully covering damage costs stood at 16.5%. This figure marks a significant rise from 6.5% in 2017, highlighting the growing problem of underinsurance. On average, the amount paid out for these underinsured claims was 19% less than the required rebuilding cost, potentially burdening households with substantial expenses.
The Complexity of Home Insurance and Economic Factors
A major factor contributing to the rise in underinsurance is the complexity of home insurance as a product. Many individuals struggle to accurately determine the rebuilding cost of their property, leading to incorrect coverage. Additionally, economic factors, such as inflation in the housing sector, have further complicated the situation. Rising costs of materials and repair services make it challenging to estimate accurate rebuilding costs, even if based on previous figures.
Ensuring Adequate Coverage for Your Home
- Consult with a Building Surveyor: Seeking the assistance of a building surveyor provides the most accurate valuation of your property’s rebuilding cost. Though this option may come with a cost and scheduling considerations, it ensures a comprehensive assessment by an experienced professional.
- Use a Free Rebuilding Cost Calculator: While it requires input from you, such as determining the square footage and evaluating the value of above-average fittings, it provides a reliable estimate without significant financial investment.
- Properly Assess Rebuilding Costs: Undertaking a thorough evaluation of the rebuilding cost of your home is crucial to ensure you have the correct level of coverage. By using a surveyor or a reliable rebuilding cost calculator, you can avoid the pitfalls of underinsurance.
Underinsurance poses a significant risk to homeowners in Ireland, potentially leaving them financially vulnerable in the event of building damage. The alarming increase in underinsured claims highlights the need for proactive measures. By seeking professional guidance from building surveyors or utilizing reputable rebuilding cost calculators, homeowners can accurately determine the coverage needed for their properties. Taking these steps will help protect against the consequences of underinsurance, providing peace of mind and financial security in uncertain times.