house insurance

Haille

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Can someone please confirm when one is looking for a quote for house insurance[investment property] is it the area of the rooms of the house along with an estimated re-build cost that matters.Is the current market value of the house irrelevant ? What relationship should exist between the re-build cost and the current market value? If one insures house for current market value will the insurers only pay the re-build cost in the event of fire? Just wondered if people are over insuring their houses if this is the case,as the house site will still be in existence in the event of fire.
 
FBD is my house insurer and they calculate the rebuild cost based upon sq. footage of your property and area of the country. I would have thought that you could insure your building for more - but surely then you're paying over the odds, (like insuring an old banger for €10k - will only push up your premium!)

The rebuild price includes fireplace, wallpaper/paint and floor coverings. You can then ensure your contents for whatever you like. The current market value of the property doesn't come into the insurers equation really.
 
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Hi Haille,

You are right, in house insurance the insurance company does not cover the site (except for occupier/tenant liability).
The market value may exceed, match or be lower than the current re-build costs but there is no correlation between them.
The insurance company will only indemnify up to current re-build value of the property (including any site clearance costs etc) assuming of course the property is adequately insured in the first place.
Any amount insured over the current re-build costs is surplus to requirement from an insurance point of view.
As 'location' influences house prices a property in location A built to the exact specifications as a property in location B could command very different prices.
Sometimes the market value will be below re-build costs. The point to note is that whatever the market value it is imperative that at least the re-build value is insured. Not doing so would result in the 'average clause' being applied by the insurance company in the unfortunate event of a claim (even a partial loss).
Simply, this means that if your property's re-build value is €300,000 but is insured for €250,000, a €100,000 loss could result in a €83,000 payout.

Remember when calculating re-build value to adjust for extensions, boundary walls, out-buildings, higher than average fittings/floor coverings etc.

Re-build costs too vary by location. The Society of Chartered Surveyors publishes a guide to re-build costs annually and this is available at [broken link removed]

regards,
 
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