Homeowners face 20% hike for house insurance as rebuild costs soar

The national average rebuild costs of a house have increased by 21% in the last year. Picture: Denis Minihane

Homeowners are having to pay up to 20% more to insure their properties as the cost of rebuilding homes has risen by more than €50,000 in the past year.

Householders already struggling with the spiralling costs of living are being quoted hundreds of euro more than last year to renew their buildings and contents insurance.

While the surge is being blamed predominantly on “skyrocketing” costs in construction, umbrella body Insurance Ireland said other factors also contribute.

“The costs of repair and materials are only some of the factors in the assessment of risks and calculation of premiums by insurers,” it said.

“Under competition law, Insurance Ireland is not in a position to say if the increase of costs on these parameters will lead to a general increase in premiums.” 

However, Daragh Cassidy of Bonkers.ie says the ban on "price-walking" could also be contributing to the rise. Price walking or the "loyalty penalty" is where insurers had previously charged loyal, long-term customers higher rates than new customers.

Now it means that, all things being equal, customers will be charged the same when renewing for the first time, compared to those renewing for the fourth or fifth time. Mr Cassidy said:

It means the kinds of people who previously negotiated new deals, or had threatened to leave, have to be charged the same price as someone who never threatened to leave.

However, Sinn Féin’s Pearse Doherty, who had long called for a price-walking ban, said it is more likely that the increase in construction costs is to blame.

The hike in home insurance premiums comes as new figures published by the Society of Chartered Surveyors Ireland (SCSI) show that the national average rebuild costs of a house have increased by 21% in the last year.

The typical rebuild cost for a three-bed, semi-detached, 98m sq house in Cork is now €228,920, the SCSI said, €48,584 more than it would have been in 2021. The cost has gone up by €56,000 in Waterford.

The increase in the price of building materials, coupled with supply-chain difficulties, played a major role in these increases, according to Kevin Brady, who chairs the SCSI’s Quantity Surveyors Professional Group.

“Although pricing pressures on certain materials such as timber, plasterboard, and insulation have eased slightly, rising fuel and energy costs are continuing to affect the supply chain,” he said.

“This is a direct result of the war in Ukraine and is leading to a sustained increase in the price of energy-intensive materials such as concrete, aggregates [infill material], steel, and paint. Coupled with these material price increases, ongoing labour shortages show no sign of abating and are also pushing up rebuild costs.” 

Mr Brady said this drives home the need for homeowners to review their house insurance. If they are not adequately insured, householders may have to meet some of the rebuilding costs themselves if something were to occur.

He said that in a case where a house is insured for €270,000 but the rebuilding cost is €360,000, they could face the €90,000 shortfall.

Similarly, if there is a partial loss, which costs €60,000 to repair, the insured party would only receive €45,000 and would have to provide the balance of €15,000. This is something many homeowners may not be aware of.

With families facing huge increases in their energy bills and the price of the average food shop, a spike in home insurance will only place them under further pressure, according to Dermott Jewell of the Consumers' Association of Ireland.

“We’ve always got to be cautious and careful in this,” he said.

“The inability to insure is one of the worst disasters to affect any household [should it be needed]. It’s important it’s set at an affordable rate, particularly in the current environment.”