Many Irish homeowners over-insuring properties, warns brokers’ association

HOUSEOWNERS are over-insuring their houses because they are unaware that premiums are calculated on rebuilding costs, not the market value.

The market value of a property has little or no relationship to the cost of rebuilding your home, experts have warned.

Director of general services with the Irish Brokers Association (IBA), Brian McNelis said: “It is hugely important, especially in this economic environment, that homeowners are aware that their insurance premium is based on the value of replacing the house. There are probably many houses over-insured in Ireland now.”

According to the Irish Society of Chartered Surveyors (SCS), the cost of rebuilding a three-bed semi-detached home in Dublin in March 2009 that measures 1,023sq ft would have been €199,485 while rebuilding a similar property in Cork would have been €151,404.

The costs do not include any allowance for contents such as carpets, curtains, loose furniture and domestic appliances, where separate insurance cover for contents is required.

Mr McNelis suggested people seek advice from a broker or visit the SCS website (www.scs.ie).

The Financial Regulator said consumers should insure their home for the amount it would cost to rebuild it, or the reinstatement value. This is different to the market value of your home, which is the value of the house if it was sold.

“If a house is insured for too much, the premium will be higher than necessary and consumers won’t get any extra benefit if they have to claim, as insurers won’t pay out more than the rebuild cost,” they said.