Everyone knows insuring your home is important; it’s a way to protect perhaps the most valuable investment you will ever make. It’s frequently one of the first steps for a new homeowner, and provides tremendous peace of mind – as well, of course, as assistance when disaster strikes.
But just as your home evolves and changes over time, so too should your insurance cover; it’s not a simple matter of ‘set it and forget it’. In fact, you should quickly review your home insurance every single year, to ensure that your policy is at the correct value for your property. Over-insuring, and under-insuring, a home can be a costly error – and with re-build costs increasing over the past two years, it’s never been more important to get it right.
So let’s start with one of the most basic questions anyone would ask; how much should I insure my house for?
Value vs cost
One of the most common misconceptions about home insurance is that it’s valued against the market price of your property. That, of course, is normally far higher than the actual cost to rebuild the structure and any outbuildings you may have – but it’s the rebuild cost and an allowance for some inflation that your policy should cover you for. Calculating your insurance based on market value will likely leave you over-insured and shelling out for cover that you’ll never be able to claim.
When thinking about home insurance you should assess the current cost of the reconstruction of all buildings, including outbuildings and allow for inflation.
The rebuilding cost of your property, not the market value, should be used when seeking home insurance quotations.
In essence: if, with some inflation it would cost €215,000 to rebuild your home and outbuildings, then that’s the sum it should be insured for.
It’s vital to note, though, that rebuild costs will fluctuate – which can easily lead to your property being under-insured. A March report by the Society of Chartered Surveyors Ireland shows that rebuild costs have increased by a national average of 7.3% over the past two years1. When the cost of rebuilding your home increases, your policy should reflect that.
It’s why we recommend re-assessing your policy on an annual basis – and the SCSI’s House Rebuild Calculator can help you identify the current rebuild value of your home. And their website is a great resource of information.
Recent market research commissioned by AVIVA established that, while the majority of homeowners were confident that they had adequate home rebuilding and contents cover in place, a significant 36% of respondents believed that they could be underinsured. That’s a lot of uncertainty. The good news is, this can be quickly addressed. My advice, to those homeowners, is to review the adequacy of your cover each year and don’t leave yourself exposed if you need to make a claim. Use the SCSI tool, it’s easy to use and accurate. And importantly at Aviva, we use the same data to review adequacy of cover with our claims.David Lyons, Senior Claims Manager
It all adds up
Spending more time knocking around the house has seen huge numbers of people tackle home improvement projects – from revamped bathrooms and refitted kitchens to loft conversions and new conservatories.
In fact, our research found that 1.5 million homeowners have spent over €11 billion in the last 12 months on home improvements, and over 861,000 homeowners have plans to undertake further improvements to their homes.
And while your insurer doesn’t need to know about paint jobs, carpet fittings or other cosmetic changes, it’s a standard condition on most policies to inform your insurer about structural renovations and alterations before you begin.
Not only will the value of your home likely change, but you may also see your policy impacted by everything involved; for example, the workers and materials on site, or parts of your home being exposed to the elements for a period of time.
So, if you’re considering undertaking a new project around your home, make sure to consult your insurer beforehand. It could also be a good idea to look at taking out extra accidental damage cover for your home’s contents, as your standard policy won’t cover any mishaps during renovation.
At Aviva, we’re committed to protecting your home, that's why you get help in a home emergency as standard. To learn more about this and the other great benefits offered by Aviva home insurance.
We encourage our customers, where possible, to make use of our online options to access any help you need. If you have a query you can reach us via our contact forms. MyAviva is an online self-service portal available to all our home and car insurance customers.