Home House Insurance: how do I decide how much to insure building for? Estimate contents?

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Peg Dunne

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House insurance up for renewal, how do I decide how much to insure building for. Also how do I estimate contents.
 
There is a guide published by the Society of Chartered Surveyers in Ireland.

[broken link removed]

As a general rule contents are usually allowed for as a percentage of the building insurance usually 20/25%
 
Contents: go into each room and put a price on everything and add it roughly. Doing as a percentage can be way off
 
My current insurance company asked me the square footage of my house.

They asked me how much I wanted to insure it for. I asked them what max they would pay on a complete destruction.

The answer gave me a reality check! However, I have a tracker and I paid the amount my mortgage company requested.

A year is a long time in insurance!

Marion
 
My current insurance company asked me the square footage of my house.

They asked me how much I wanted to insure it for. I asked them what max they would pay on a complete destruction.

The answer gave me a reality check! However, I have a tracker and I paid the amount my mortgage company requested.

A year is a long time in insurance!

Marion

Am a bit confused by the above.

Conventional practice here is that you look at the reinstatement cost for your house and insure for it.

Take this question from the 2011 LC Business paper II:

I am a well know radiohead and I live in a 2,000 sq foot bungalow in Dalkey.

I am paid c 1 mill yuro pa by the state run radio station.

I bought the vacant site, with FPP for a 2,000sq ft house, for 1 million yuro and the build cost 320,000 yuro [ 2,000 sq feet at 160/sq foot]

As herself wanted a new dress for our house warming party I borrowed 1.6 million on a 25 year ECB tracker of ECB +0.25% with interest only for the first 5 years

What should my house insurance be for?

Ignore contents
 
Hi Hasta,

It's not difficult really.

Ask the insurance company what they will pay you for a complete destruction of your house.

If you have a contract with a mortgage company, do what they say insurance wise if you are on a tracker - even if it's greater than the destruction price given above.

Simples.com :)

Marion
 
They asked me how much I wanted to insure it for. I asked them what max they would pay on a complete destruction.

The answer gave me a reality check! However, I have a tracker and I paid the amount my mortgage company requested.

Are you saying your mortgage provider want your property insured for an amount which is more than the current rebuild cost ? if in negative equity, possibly your current outstanding mortgage amount ?

If so, I would think the Financial Ombudsman would not allow a lender to withdraw a tracker on this basis.

Why should anyone have to pay a higher premium for something they can never claim for ?

The terms and conditions for my tracker mortgage simply state I must insure the property for its full reinstatement value.
 
Hi twofor1

My current insurance company gave me a sum that would only pay out if my house were completely destroyed. This sum was less than the specified amount requested and stated on a number of letters and documents by my mortgage provider.

So yes, I am overpaying for insurance with this particular insurance company. They were the cheapest quote.

Other insurance companies told me I was undervaluing my house and they placed the reinstatement value at a rate higher than that requested by my mortgage company.

I have not contacted my mortgage company in relation to this issue.

So maybe I should have said its notsimples.com.

Marion
 
As a rule of thumb you insure for rebuilding costs not any putative value. Most of a house's value is in the site. Or at least it used to be! The insurer will only replace the building so this is all they should need to value for replacement. The guide from the chartered surveyers institute is a good guide to use.
 
My current insurance company gave me a sum that would only pay out if my house were completely destroyed.

I'd get a definition of that phrase "completely destroyed" Marion.

What happens if fire destroys only half the structure?

Not wishing it on you, just pointing out a loophole.

ONQ.
 
The terms and conditions for my tracker mortgage simply state I must insure the property for its full reinstatement value.

Or adequately insured in the case of mine. In the last two years/two different policies I have insured for a significant sum less than my mortgage provider had in the original [construction boom peak] valuation. My Mortgage Provider wrote to me and said I did not insure for the amount in the original valuation. Both consecutive years I wrote back to them and told them the house was adequately insured and I considered the matter closed. They wrote back on both occasions saying they had 'updated their records'. I will increase the sum insured when the rebuilding costs dictate that I should.
 
Hi ONQ

That phrase was missing the word "they".

My current insurance company gave me a sum that they would only pay out if my house were completely destroyed.

They gave a maximum figure for reinstatement because I had asked them how much they would pay out if it were completely destroyed.

I wanted the insurance company to tell me the reinstatement value because I felt they were the experts and they should know that price. I asked what if I had more than a builder's finish to my house. They said they would only pay the reinstatement price quoted regardless.

As I mentioned above, another company gave me a different price for reinstatement based on their company calculations. But they admittedly were more thorough in their assessment - went through what I had paid for kitchen, bathroom stuff etc.

Marion
 
I asked an insurance company recently how they arrived at a sum insured (updated) and they said it was based on an assessors calculation of square footage and allowing for rebuild cost to include "special work", demolition and removal. This sum insured had a rebuild cost at approx 30% higher than the SCS which they said was out of date. I said that the figures would be lower this year. Pretty much they said tough.
 
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