Key Post How much should I insure my home for?

Brendan Burgess

Brendan Burgess

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It's very important to insure your home for the full cost of rebuilding it.

Why?
If your true rebuilding costs are €200k and you insure for only €100k, the insurance company will pay only 50% of the cost of any claim.

So if you have a fire which costs €60k, the insurance company will pay only €30k.

This is called "The Average Clause"

How do I establish the rebuilding costs?

The SCSI (Society of Chartered Surveyors) has a handy calculator.

scsi.ie

SCSI House Rebuild Calculator

A Guide to Calculating House Rebuilding Costs for Insurance Purposes (2023/24) Are you renewing your home insurance and unsure what rebuilding cost you
scsi.ie scsi.ie

This is valid as of 2021 - not sure what month it was published.

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I presume that if you use these, the insurance company would accept them?

But maybe you should increase the 2021 figure by 20% to be sure to be sure.

Brendan
 
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Most insurance companies will increase the amount insured in line with inflation.

This is what my insurance broker Frank Glennon said

Index Linking
Your Insurer may have automatically increased your Buildings and Contents sums insured (including All Risk items) to
protect you from the effect of inflation and to cater for reinstatement to BER rating category A and to provide for
improvements made to your property.

We would recommend that you review your sums insured as outlined on the Renewal Policy Schedule. Our website offers guides to assist you in calculating the sums insured, please visit our Home Information Centre at www.glennons.ie
(But I clicked on the link and it doesn't bring you to any guide that I could find.)

Allianz has automatically increased my sum insured from €321,291 to €343,781 an increase of 7%.

That seems a bit low given all the talk about the increase in construction costs.

The 2021 calculator comes out at €333,577.

If I increase this by 20% it will come out at €400k.

Brendan
 
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A lot of people include the site cost in valuing their house/dwelling. Am I correct in saying this shouldn't be the case, if so, surely a houseowner can take it from the overall value of what's insured, or is that a totally inaccurate assumption on my part?
 
The value of a house/dwelling (sale value) has nothing to do with the cost of rebuilding it - well they may well be correlated, but they are two separate valuations
 
3k per metre is probably a good guide given the recent oil and commodity rises, war in Ukraine and rampant inflation. You need to allow for site clearance and professional fees.
 
noproblem said:
A lot of people include the site cost in valuing their house/dwelling. Am I correct in saying this shouldn't be the case, if so, surely a houseowner can take it from the overall value of what's insured, or is that a totally inaccurate assumption on my part?
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You don't rebuild a site. You may have to clear it though....

This week I increased the rebuilding cost of my house by 30% on my insurance renewal.
 
I did this recently, putting up insured value by about 12%.

Zurich increased it at no extra cost until my renewal in May. I'll face a hike am sure then.

Nicklesilver said:
€3k per metre is probably a good guide given the recent oil and commodity rises, war in Ukraine and rampant inflation.
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This is what I've heard anecdotally too but the SCSI numbers are at least 20% below this. It's very hard to know what to do.
 
Can I ask what is probably a stupid question!!
Why is there a difference in building costs around the country??
 
Brendan Burgess said:
How do I establish the rebuilding costs?

The SCSI (Society of Chartered Surveyors) has a handy calculator.

I presume that if you use these, the insurance company would accept them?
Click to expand...
Had to go through a rebuild after a house fire. The insurance company used the Society of Chartered Surveyors report. It's produced annually. I think it's published in September but not sure...

From my own experience, my insurance was not increased automatically.

Nicklesilver said:
You need to allow for site clearance and professional fees.
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Check your policy - that may be covered. My insurance covered it & that cost didn't need to be factored into value.

NoRegretsCoyote said:
This is what I've heard anecdotally too but the SCSI numbers are at least 20% below this. It's very hard to know what to do.
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It is not the market value of your property. You need to insure your building(s) for the cost to rebuild. It's a simple calculation: area multiplied by €/m (from SCSI).
  • Remember to include all floors & other buildings (garages, sheds, etc).
  • If you've done an extension after the pandemic, don't forget to include it.
  • Then add some contingency at the end - it's in the insurance companies interest to say you are under-insured, so cover yourself.

Now if a catastrophic event happens,
  • insurance company assess if you are covered (above calculation) - has nothing to do with the extent of damage. So make sure you don't find yourself under-insured.
  • we hired a Loss Assessor who in turn hired engineer + QS. They build out a detailed rebuild quote which the Loss Adjustor goes through line-by line & challenges. Ultimately, this is what we were given to rebuild the house.
 
Contents Insurance
The biggest miss for us was Contents insurance. Every year you find adding a few bits to the house & rarely take things out. New TVs, a device or two, new couch... it all adds up.

So worth spending time on calculating your contents. We were 50% under insured - not a good place to be...
 
With the steep rise in house building costs recently I am concerned that I am under insured.
I am currently insured for €450,000 rebuild cost €90,000 contents.

My details…/
5/6 bedroom (4 toilets and 3 bathrooms) semi detached home in Swords. Worth approximately €650,000
Size…1,500 sq ft originally, but now 2,500 sq ft after extension.
Upgraded large kitchen €15,000
Upgraded 3 bathrooms approximately €18,000 total.
Tiled downstairs (I guess these would be fireproof and water resistant?)
Also fairly expensive furnishings around the house.
Any other information required? thanks
 
Receipts for all the extension work done, especially any electrical and Gas. Those trades need to be signed off by registered contractors.
 
landlord said:
With the steep rise in house building costs recently I am concerned that I am under insured.
I am currently insured for €450,000 rebuild cost €90,000 contents.

My details…/
5/6 bedroom (4 toilets and 3 bathrooms) semi detached home in Swords. Worth approximately €650,000
Size…1,500 sq ft originally, but now 2,500 sq ft after extension.
Upgraded large kitchen €15,000
Upgraded 3 bathrooms approximately €18,000 total.
Tiled downstairs (I guess these would be fireproof and water resistant?)
Also fairly expensive furnishings around the house.
Any other information required? thanks
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That seems about right, or a little on the high side.
Remember, no site costs, no services connection costs, most likely no foundation costs and no excessive profits for the developer (av net profit is running 15-20% for the big developers).

I've 220sqm detached and have it insured at 350k which is higher than someone nearby has paid for a new build that is just finishing. Similar style and size. (rural Kildare)
 
peemac said:
I've 220sqm detached and have it insured at 350k which is higher than someone nearby has paid for a new build that is just finishing. Similar style and size. (rural Kildare)
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Judging by the SCSI rebuild costs calculator. you are significantly under-insured. Forget about purchase prices, it's rebuild rates you need to consider and they're running north of €2k per sqm in the greater Dublin area. Bear in mind that if you need to make a claim for any reason, the insurer will reduce any claim amount proportionately if they feel you are underinsured overall.

Developers / builders will go where the most profit is, it's not like they do fire-rebuilds ({which can be tricky) at reduced rates.
 
I have a refurb (that was pretty much a rebuild) 128 sqm terraced house in Cork City. The rebuild calculator returns €248,320 (currently insured at 300k). In 2019/2020 I would of spent approx 220k to build + maybe 30k kitchen/sanitary/flooring & painting.

Few things to note:
- there is no easy access to the site (the garden is landlocked) and the house is up off a raised footpath.
- Planning was for renovation (should of went for a new build as the original structure was >100 yrs old which limits insurers only front wall remaining everything else manually shifted in and out).

Are 300k rebuild, 50k contents sufficient or excessive?
Any tips on reducing insurance premiums?
Also, what's a typical voluntary excess?
 
Leo said:
Judging by the SCSI rebuild costs calculator. you are significantly under-insured. Forget about purchase prices, it's rebuild rates you need to consider and they're running north of €2k per sqm in the greater Dublin area. Bear in mind that if you need to make a claim for any reason, the insurer will reduce any claim amount proportionately if they feel you are underinsured overall.

Developers / builders will go where the most profit is, it's not like they do fire-rebuilds ({which can be tricky) at reduced rates.
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It wasn't a purchase price, he had the site and has built on it. His total cost of building is coming in at 330k inclusive of all fees and services.
Granted it's in rural Kildare, but it's a good guide for me at present
 
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