Home owners should take action to avoid being caught out if they need to claim for repairs or replacement of their home by making sure their sums insured reflect today's costs. Relying solely on the Consumer Price Index (CPI) could result in a home building insurance payout falling significantly short if their property is severely damaged or destroyed.
Why? Because while the CPI surged by 7.8% nationwide over the 12 months up to December 2022, the Building Price Index rose even more to 11% in the 12 months leading up to June 2022. This discrepancy constitutes a warning to home owners to update the sums insured on their home building insurance or risk incurring a loss.
A perfect storm of factors has created conditions that are driving up the price of building materials, compounded by:
As a result home owners or investors who need to rebuild or repair their damaged property should brace themselves for continued challenges and heightened expenses in the construction industry.
Regularly updating the sums insured on your property to ensure they cover the replacement cost of the building is essential to avoiding underinsurance.
A good way to do this is to get an independent property valuation. This will ensure the sums insured are reflective of the true cost to rebuild the property.
It is recommended a building replacement valuation be conducted at least every three years. Gallagher insurance brokers can support this for their clients and/or you can do this directly with market providers.
Other options for obtaining an accurate and up to date property valuation include:
It's important to check the terms and conditions underlying your property insurance and this is an area where broker expertise can make the difference between a gap in your policy and adequate cover.
Understanding these terms and how they relate to your home building insurance is critical. Your broker can help by recognising potential issues and suggesting avenues for addressing them.
Our property insurance specialists can provide invaluable advice and help with calculating the appropriate sum insured for your home building cover, checking that the terms of your policy are current and allowing for a realistic time frame.
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