Important information

Underinsurance occurs when you do not have sufficient sums insured to cover the full rebuild or replacement cost of your property. If you have a claim, of any size, you may not receive the full amount necessary to rebuild, repair or replace your property if you are underinsured because Average will apply. 

Average means the amount your claim is settled for will be reduced by the same percentage you are underinsured by. Here are some examples of how underinsurance could affect a claims payment: 

Example A) Partial Damage

– The insured home is insured for €300,000 but the full cost to rebuild the property is €400,000.

– This means that the home is under insured by €100,000 (25%).

– Damage occurs to the home and the cost to repair the damage is €100,000.

– Where the condition of average applies a deduction of 25% (€25,000) is made from the cost of repairs.

– Therefore the most the policyholder will receive is a payment of €75,000.

Example B) Total Loss

– The Insured home is insured for €300,000 but the full cost to rebuild the property is €400,000.

– This means that the home is under insured by €100,000 (25%).

– Damage occurs to the home where it requires a complete rebuild.

– As the home has been insured for €300,000 this is the maximum payment that can be made. The outcome is the same when the condition of average applies.

In both of the above scenarios the payment made to the policyholder is not sufficient to fully repair the damage caused. You should also read your policy schedule and/or statement of fact document in full which may outline additional terms, conditions or endorsements, in addition to those in your policy booklet, which may impact on the policy cover and/or settlement of a claim.

Review the amount you have insured your property for (sum insured). This is especially important in times of inflation when the cost to rebuild or replace property is increasing. You should also consider any changes you may have made to your property such as the addition of an extension, purchasing additional contents or personal possessions.

Your buildings sums insured should include the full amount to rebuild or repair your property if it is damaged or destroyed, including the cost of site clearance and architect's’ fees. This should not be confused with your home’s market value. The buildings sums insured covers the physical structure of a property– such as walls, floors and roof. It should include permanent fixtures and fittings within your home, including bathroom suites, fitted kitchens and built-in wardrobes as well as external structures – such as outbuildings, garages, garden sheds, boundary walls, fences, hedges, plants and so on.

Your contents sums insured should reflect the amount it costs to replace all household goods and personal possessions as new. 

As well as your buildings and contents, Underinsurance can impact your personal possession, caravan, or boat cover where selected, so you need to review these as well.

The SCSI has a useful guide that can help you calculate your buildings sums insured. For more information, refer to ww.SCSI.ie The SCSI calculator should only be used as a guide as it provides the minimum amount you should insure your property for. If the SCSI calculator is not suitable for you or to be totally confident that your home is fully insured, you may wish to hire an independent surveyor, or relevant professional to help at your own cost. They will calculate the exact rebuild cost of your home. The SCSI website also provides a list of relevant experts that provide this service. The cost of using these experts is not covered under your policy.