More than 4 in 10 Irish homes are not adequately insured 

More than 4 in every 10 homes are likely to be underinsured. This is based on findings from a new survey by Peopl.ie, a nationwide provider of home and life insurance.

The survey of 1,000 respondents, conducted by iReach, looked at exactly how people value their home when it comes to taking out insurance – and consequently whether most people in Ireland are adequately covered as construction costs continue to increase, with building materials alone rising by 17.8%.

Paul Walsh, CEO of Peopl Insurance, spoke of what they have termed “the insurance gap” and how it is leaving unknowing homeowners in Ireland in a perilous financial position.

“The correct method of arriving at the “sum insured” on your home insurance policy is to calculate the rebuild cost of your house. But just under half (44%) of the people we surveyed were found to be using the incorrect calculation. Construction costs are currently spiralling upwards at a rate not seen in years – for example structural steel prices in August were almost 58% higher than they were 12 months previous, and other construction materials such as cement (24%), sand and gravel (16%), and plaster (22%) have all risen in the last 12 months.

"This doesn’t take into account the supply chain issues currently affecting the sector, or factor in the impact of rising energy costs. This means the cost of rebuilding houses across the country is increasing – all of which has a direct knock-on effect on how much you insure your property for. But people simply don’t know any of this and are underinsured as a result.

On top of this, the survey revealed that people don’t review their cover often enough - 3 in 10 people haven’t reviewed their home insurance in the last 3 years – if ever. This is understandable – it’s easy for such a task to fall down the priority list with all we have to take care of in life, and many people simply would not be aware of the fact that they are underinsured, or be aware of what it means. However, the upshot of this is that your home may not be adequately covered in the event of making a claim.”

Highlights from the Peopl.ie survey include:

More women (61%) than men (52%) know how to calculate their sum insured.
The most popular incorrect assumption (39%) was that the current market value of the property is the correct amount that your policy should be valued at.

More older people know how to calculate their home insurance cover accurately and are better at reviewing their cover frequently – 86% did so in the last 1 – 3 years, compared to just 68% of 35–44-year-olds.
A worrying 16% of people simply never review their home insurance policy.

Mr. Walsh observed from the findings,

“While some might use several different considerations, many are insuring their homes based on incorrect valuations – be it the past or current property price, the amount outstanding on the mortgage, or the cost of the land on which the house is built. It appears from the findings that people possibly use more than one of these values and amalgamate them. All of these approaches are incorrect however, and really have no bearing on how much you should insure your home for.

The most important message we’d like to see more people take on board is to avoid confusing the market value of your house with its rebuild cost. Underestimating this important figure could mean your house is underinsured, which would leave you out of pocket if the worst was to happen.”

The Home Insurance Review

Mr. Walsh concluded,

“If you are thinking of reviewing your policy, it’s also worth considering shopping the market for a new provider as competition in the house insurance market is very strong at the moment and savings of up to 30%[2] are possible with a little shopping around. Inertia is our worst enemy, from two perspectives.

"On one hand there are the savings to be made, which will affect your pocket in the immediate term, but there’s also the longer-term consequences if anything was ever to happen your home. Come a claim, the last thing you want is to be reading the finer detail and realising that you are insufficiently insured, or have not updated your policy to include any major structural changes etc. since your last review.”