Increase coverage of home insurance?

[pinoy]

Do we need to increase coverage of home insurance if we have done renovations? i.e. new kitchen, attic or garage conversions?

Thanks.

 

[ClubMan]

Most likely yes in order to avoid the risk of underinsuring and averaging being applied to claims that may be made. You should check [broken link removed] for a rough guide to estimating your rebuilding costs but if in doubt you may need to get an insurance valuation survey done to be sure that you are buying adequate cover.

 

[Diddles]

Hi Clubman,

As far as I am aware an insurance company only pays out on the square footage of the house if say burned to a shell.
Take for example
House 2000 sq ft.
Insurance will pay you 2000 x Rebuilding cost per sq ft say €130.
=€260,000 + 10% legal and survey costs = total of €286,000.
Say the house had a market value of €750,000 and you had it insured for that you would be really disappointed with the pay out.
Contents insurance are different as far as Im aware.
I think this is the way insurance companies operate so if any different I would like to Know

D

 

[ClubMan]

Are you sure about that? After all the buildings insurance will presumably cover certain items that are considered buildings and not contents so I'm not so sure that they take a simple area x rate approach to calculating the payout. I realise that overinsuring does not guarantee a lump sum in excess of the rebuilding costs but I always assumed that the payout would be calculated on a case by case basis. For example, two identical houses - one totally open plan and the other subdivided by walls into rooms would presumably have different rebuilding costs? Maybe some insurance insider can comment?

In any case, the area of the house in question has increased so the insurance would need to be increased on that basis alone. In addition, an extension with a flat roof might have a different (lower?) rebuilding cost than one with a pitched and tiled/slated one?

 

[Seagull]

One thing I never got quite clear on is whether fixtures and fittings fall under building or contents. Our current insurer consider the kitchen to fall under contents. You might want to find out how your insurer treats this so that you increase the correct figure.

 

[Ravima]

House should be insured for the rebuilding cost, not the market value, which would in all likelihood be higher. in theory it shoudl cost much the same to build a house in Shrewsbury road as in Kimmage (per monopoly board), but the market value of each would be substantially different.


As a general rule, contents are defined as anything you can take with you if moving, thus fitter kitchen or wardrobes are part of the building whilst washing machine would be contents. Built in cooker would be building, but stand alone would be contents. carpets would be contents, but timber follr would be building.
Depending on the insurer, the concept of average may apply. That means that if you have the house insured for €100k but the rebuilding cost is €200K, in the event of a claim for €50K, you would only be paid €25K if average applied, but if average did not apply, you would get the full €50K.

 

[ClubMan]

but if average did not apply, you would get the full €50K.

Less any excesses.

 

[Diddles]

Hi Clubman,

I would be interested like you to hear the opinion of someone in the insurance industry as to how they calculate the rebuild cost of a home.I got this calculation from an auctioneer who said he had first hand experience of this.
Might be an interesting question for the clerk the next time you get a quotation as to what you would receive in the event (God forbid) of a total rebuild.

D