BOI pulling a quick one on house Insurance issue?

Hi,
I took out a mortgage for my residential home on September 2010 with BOI. It is a 4 bed dormer bungalow on 3/4 of an acre in the countryside. The purchase price at the time was 269k, and the draw down was 248.4k.

Initially I took out home insurance with BOI as well. The re-instatement value for the house was 260k on this insurance policy. This policy was in place until last May, when I then switched to 123.ie (much cheaper). I changed the re-instatement value of the house to 170k at this point. This took into account the significant drop in house prices that have occurred over the previous 3 years. I reckon that my house is now worth (at an absolute best case scenario) 210K. Assuming that the land is worth at least 60K, this left we with a rebuild cost of 150K. I insured it for 170K.

Bank of Ireland have written to me and stated "Please note that it is in your interest and a mortgage condition that your property is insured for a minimum of 260,000. If you have reduced your cover please ensure to forward us a new valuation report detailing same"

A valuation report will cost me 100 euro. To up the re-build value to 260k will also cost 100 euro. I spoke with them on the phone and they said they would accept a rebuild valuation print out from the Society of chartered surveyors Ireland website. This website is a complete waste of time. I put in all my details, 4 bed dormer bungalow (1990 sq ft) etc. etc. nothing fancy with my house. I got back a rebuild value of 283k.

This seems to be complete nonsense, I purchased the house and land it was on (3/4 acre) for 269k in Sept 2010 and now the SCSI website is telling me that the rebuild cost of my house is more than what I purchased it (and the land) for 3 years ago.

It seems to me that no matter what I do it is going to cost me 100 euro to rectify this. If I get a rebuild valuation done it will cost 100 euro, if I up the rebuild value to 260k it will cost 100 euro.

I have asked BOI to supply me with proof that it is "a mortgage condition that your property is insured for a minimum of 260,000" It then says "if you have reduced your cover please ensure to forward us a new valuation report detailing same"

I asked the BOI person what will happen if I refuse to co-operate here, i.e not incur the 100 euro cost it will take to fix this and instead leave the buildings insured for 100 euro. They have informed me that at that point they will no longer consider the building insured from a mortgage point of view.

Is there any case for involving the ombudsman here?

Do you have a tracker mortgage? That would be the only reason I would proceed with caution. If they attempt to remove tracker as you are out of contract terms like LTV based on valuations etc.

Personally,I would be tempted to ignore them for a while and see how it goes if you are confident you have adequate home rebuild insurance.

The rebuild cost is not based on the house or site value. It is what it would cost to replace the house if it were to be knocked to the ground. I would be inclined to accept the SCSI. No offense but just because you don't agree with it does not mean it is incorrect (or a waste of time). I think you need to see what you would like to happen if, God forbid, it was knocked down. Remember also rebuild costs should include the removal of rubble and site preparation.
Btw - It's not unreasonable for boi to want to make sure your figures are accurate. What happens if you are under and the house is only 3/4 built. They would not have an asset they thought they had.

This is entirely normal, all banks to the best of my knowledge require that you insure the house for the valuer's initial rebuild cost. If that has changed then they will look for a new valuation or some will accept the SCSI figures.

I changed house insurer last year to FBD and they would only insure the house if I went with the value specified on the SCSI site for the relevant area of house, this is way more than I could rebuild this house for even allowing for site clearance. There wasn't even a bank involved so it seems it is not just them requiring this.