Increase in building costs- Are people now underinsured?

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rustbucket

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With a huge increase in building costs in the last year (materials, labour and a shortage of builders) I’m wondering what impact this has on house insurance policies?

Are building costs automatically increased with inflation for insurance purposes or should we all be increasing the rebuild costs on house insurance policies?

My insurance rebuild costs were x when policy was taken out. Rebuild costs are now y or z.

What if my house burns down in the morning. Am I now under insured?
 
Roro999 said:
Bearing this in mind upped my buildings cover from 300k to 400k.
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Sounds like a very hefty increase. 33%! Did you cross check your estimate of the rebuilding cost against the SCS ready reckoner allowing for the fact that that's just a guideline? You could be overinsuring for no point.
 
Well materials alone are at least up by 30%. My builder today told me in the last 18 months Steel on its own for rsjs is up 120%. Don’t know if that’s true or not
 
Rebuilding costs gave risen so much over the pandemic period that most people are probably underinsured if they haven't increased their building cover over that time. We had a substantial claim 3 years ago and the insurance payout was reduced by 25%. I check scsi.ie every year now. Just renewed a week ago and rebuilding cost has increased by 15% over the past 12 months.
 
Slim said:
Rebuilding costs gave risen so much over the pandemic period that most people are probably underinsured if they haven't increased their building cover over that time. We had a substantial claim 3 years ago and the insurance payout was reduced by 25%. I check scsi.ie every year now. Just renewed a week ago and rebuilding cost has increased by 15% over the past 12 months.
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Why was the insurance payout reduced by 25% ?
 
Roro999 said:
Why was the insurance payout reduced by 25% ?
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I had knocked the insurance company's estimated rebuilding value back to what I believed was a realistic value for this area. I was deemed to be underinsured!
 
I have just increased the rebuild cost of my house (note this is not the market value) the insurance company will not quote you a price if you give them details of your house, but will reduce the pay out if you under value. I took it from the Charted Surveyors site, but could not understand how my 3 bed semi was more than a 4 bed semi,. How reliable is it
 
Naive question, but why don't insurance companies do this automatically on renewal? Most people don't have a clue how much building costs are changing, if at all.

This is the way it works for insuring cars AFAIK. Cover is modelled off the age and make.
 
NoRegretsCoyote said:
Naive question, but why don't insurance companies do this automatically on renewal? Most people don't have a clue how much building costs are changing, if at all.
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Most home insurance policies offer the option to index link the cover. But then people moan because their premium has gone up...
NoRegretsCoyote said:
This is the way it works for insuring cars AFAIK. Cover is modelled off the age and make.
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Not in my experience. Unless I changed the insured value it stayed the same year after year even though it was depreciating in value. This has been the case with several insurers.
 
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Slim said:
I had knocked the insurance company's estimated rebuilding value back to what I believed was a realistic value for this area. I was deemed to be underinsured!
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I found out a few days ago that if you have a shed or garage and walls not attached to the house they should added to your policy. You should also add extra for your decking and garden walls. Maybe that is where you could be underinsured. There is a tolerance of a certain percentage but each company has a different.
Maybe engage a loss adjuster if your insurance company is under estimating the cost of the damage. You have that option in your policy.
 
My recent experience is that home insurance is cheaper than a year ago and they will give you a big discount on renewal.

CSO data for insurance connected to the dwelling suggests it's fallen 2% in the last year.
 
While building costs affect the price of the insurance premium, so do claims - fewer claims equals lower prices
 
Sconeandjam said:
I found out a few days ago that if you have a shed or garage and walls not attached to the house they should added to your policy. You should also add extra for your decking and garden walls. Maybe that is where you could be underinsured. There is a tolerance of a certain percentage but each company has a different.
Maybe engage a loss adjuster if your insurance company is under estimating the cost of the damage. You have that option in your policy.
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No. The estimated under insurance was based on the size of the house excluding garage, shed and decking. I did employ an expert in insurance claims and he was brilliant.
 
Slim said:
No. The estimated under insurance was based on the size of the house excluding garage, shed and decking. I did employ an expert in insurance claims and he was brilliant.
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Did I pick this up wrong then? The loss adjuster working for us told us the above information and that the insurance company use google maps first to assess the size of the property and then when the call out then adjust accordingly. Our policy maybe includes outside shed etc. Have to double check this.
There is usually a tolerance of say 15% so if you are under insured then they can be flexible up to a point.
 
Sconeandjam said:
Did I pick this up wrong then? The loss adjuster working for us told us the above information and that the insurance company use google maps first to assess the size of the property and then when the call out then adjust accordingly. Our policy maybe includes outside shed etc. Have to double check this.
There is usually a tolerance of say 15% so if you are under insured then they can be flexible up to a point.
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Don't get me wrong, I'm not saying that your source is inaccurate, just what happened in our case. There was no flexibility with RSA but I was told that AXA would have been flexible. Not worth the risk of being underinsured, in my opinion.
 
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