- As many as half of all Irish homes could be underinsured due to many homeowners not changing their insurance to take into account inflation factors
- Just one in four (28%) Irish homeowners get their homes valued by an expert when working out rebuild costs, with a further quarter (26%) basing it incorrectly on market value
- This is despite one in five (21%) Irish homeowners saying their area has been significantly hit by storms or floods with around half of these saying it has caused damage to their property
- It is not only buildings that are being impacted by inflation issues, as home contents are also affected and six in ten (57%) homeowners admit they haven’t checked the cost of replacing their valuables in over five years
- This problem is being exacerbated by home owners not realising they should insure valuables separately with four in ten (43%) not doing so meaning if they were to lose or damage them they could be out of pocket
The current inflationary environment is causing a headache for Irish homeowners with many properties being left underinsured as a result of the fast paced increases in building materials and trade workers. There has been a thankful slowing down of this so far in 2023 but compared to five years ago the cost is still dramatically higher.
Insurance broker and risk management firm, Gallagher in Ireland which looks after many properties in Ireland, is recommending homeowners revisit the valuations they have attached to their property to help counteract the issue.
To highlight the problem Gallagher in Ireland undertook research amongst Irish homeowners and found as many as half of their homes could be underinsured. This is due to many homeowners not getting expert advice on the rebuild cost, with just one in four doing this (28%). Similarly, (26%) incorrectly basing their rebuild cost on market value, which is very different from the rebuild cost. 22% of Irish homeowners admit they have never revalued their rebuild costs leaving them at the risk of being significantly out of pocket should the worst happen. This is despite one in five (21%) Irish homeowners saying their area has been significantly hit by floods with around half of these saying it has caused damage to their property.
With weather events, including river and coastal flooding and winter storms, becoming more common in Ireland1, it is crucial that homes are adequately valued as in the event of making a claim property owners could lose out.
The increased cost of having works completed on properties is also affecting homeowners approach to their maintenance to do list. In the research, over half (53%) said they have delayed carrying out maintenance to their homes in the last 12 months due to rising costs, despite the standard buildings or contents insurance policy not providing cover for ‘wear and tear’. And of those that did decide to carry out changes and improvements to their home, one in three admitted failing to tell their insurer or broker leaving them potentially underinsured if damage were to occur.
Geraldine Kelly, Head of Operations, Personal Lines, at Gallagher in Ireland (Ireland), said: “The cost of rebuilding and undertaking works on your property has increased significantly in recent years and homeowners not taking this into account could find an insurance shortfall should something happen to their property. A very common misconception is that rebuild cost is based on the price that the property sold for, however that is not the case and homeowners should get expert advice from their insurance broker or use a rebuild calculator to work it out.”
“As well as making sure they have the appropriate level of cover in place, homeowners should make sure they are keeping on top of maintenance work as failure to do so could result in damage that isn’t covered under their buildings insurance. This is particularly important at this time of the year with the storms and bad weather continuing to come our way.”
Inflation is not just limited to affecting the costs of rebuilding properties in the event of damage, it is also impacting the value of goods around the home. An area of particular concern identified in the Gallagher in Ireland research was the lack of cover for valuables, usually items that would cost over €1500 to replace. According to the data, just 43% of Irish homeowners list out valuable items separately, leaving many households at risk of having to pay out to replace these, these valuables can be easily added to home insurance policies. Naming them separately on the policy also means they are protected when they are outside of the home, which is very common when it comes to items such as jewellery, watches and high specification technology products.
Of those that have added valuables to their insurance, over half (57%) have not had them revalued over the last five years leaving them potentially underinsured due to inflation. Less than half of homeowners review the value of their contents yearly (47%) and Gallagher in Ireland is urging them to take this important step to ensure they have the right levels of insurance in place amidst the inflationary economic backdrop.
Geraldine added: “Contents can be costly to replace and as we buy items individually it’s easy to forget how quickly the value can add up. When your renewal is approaching just take a moment to think about all the items you have purchased, particularly if they are worth over €1,500 and update your broker who can ensure your insurance is up to date.”