Your Money

Homeowners warned about paying too much for house insurance

New report suggests homeowners are overpaying for insurance cover they don’t need

In Dublin, the average rebuilding costs for a standard home increased by 1.5 per cent year on year, according to the SCSI. Photograph: Nick Bradshaw
In Dublin, the average rebuilding costs for a standard home increased by 1.5 per cent year on year, according to the SCSI. Photograph: Nick Bradshaw
Aine McMahon
Tue Jul 26 2016 - 11:36

The Society of Chartered Surveyors (SCSI) has warned that homeowners may be overpaying for house insurance. It says they are paying for more cover than they can claim in the event that they need to rebuild their home.

Rowena Quinn of the SCSI said clients were carrying 50 per cent more home insurance cover than they could claim – and overpaying on their insurance premium as a result.

Common mistake

Ms Quinn said the most common mistake homeowners made was to confuse the market value of a property with its rebuild cost.

For example, the average three bed semidetached 95sq m (1,023sq.ft) house in Donegal is €85,000, but the rebuilding cost based on the SCSI house rebuilding guide is €117,000.

READ SOME MORE

In contrast, a similar property in Dublin could sell for €350,00, but has a rebuild cost of €181,000.

In its annual guide to house rebuilding costs the SCSI examines the real cost of rebuilding houses across the country and assists homeowners to insure their home for the reinstatement or rebuilding of the property in the event of a total loss situation.

This year’s guide shows the increase in costs varied depending on location.

Rebuilding costs

In Dublin, the average rebuilding costs on a standard home increased by 1.5 per cent, while the average minimum rebuilding costs for a standard house in Cork increased by 2 per cent.

However in Galway, Limerick, the northwest, the northeast and Waterford, rebuild values have remained static.

Kevin Brady of SCSI said increases in Dublin and Cork are directly linked to the increase in construction activity seen year on year in Dublin and recently in Cork.

“Having the correct reinstatement value will not only make certain that you are not over- or underinsuring your property but will also avoid overpayment when it comes to your home insurance premium,” said Mr Brady.

Homeowners with one-off properties or period houses, Georgian or Victorian, should contact their local chartered quantity surveyor, he added.

SCSI president Claire Solon said while there had been no significant increase in rebuilding costs since last year, “this is highly unlikely to remain the case in the coming years as housebuilding activity increases and while skill shortages still exist”.