How to avoid your home being underinsured

Underinsurance occurs when the sum insured is not adequate to cover the full cost of rebuilding, repairing, or replacing all items as new.  In the event of a claim, this may result in a policyholder not receiving the full amount necessary to rebuild, repair or replace items as new.

Underinsurance can occur for many reasons, often as a result of a miscalculation of the rebuild or replacement costs or when new items or changes are made and not accounted for.

Below, we answer your questions on underinsurance and provide useful tips to avoid underinsuring your home.

What is underinsurance?

Underinsurance means you may not be fully protected in the event of loss or damage occurring to your home (buildings and/or contents, including your personal possessions).

How does underinsurance occur?

Underinsurance can occur where the amount you have insured your home for is not enough to cover the full cost of rebuilding, repairing, or replacing all items as new.  It can occur for many reasons. Check out our tips to avoid underinsurance below in order to best protect you and your home in the event of loss or damage.

How could underinsurance affect me?

In the event of a claim covered under your policy, you may not receive the full amount necessary to rebuild, repair or replace your home.

The amount of your claim will only be adjusted if your sums insured are underinsured by 15% or more. For full details on this please refer to the Underinsurance section of your policy booklet.

Who is responsible for determining how much to insure my home for?

The amount you insure your home for is referred to as the sum insured, and you are responsible for setting the sum insured.

How do I determine if my home is sufficiently insured?

The amount you insure your home for must include the full cost of rebuilding the property, including the cost of site clearance and architects’ fees.  This is not to be confused with the market value. The market value refers to the amount your home is likely to sell for which takes into account the land your home sits on. The Society of Chartered Surveyors Ireland (SCSI) provides both a guide and a House Rebuild Calculator to assist you in insuring the buildings of your home.

They also provide a link to find an expert should you determine your home is best assessed by a local Chartered Quantity Surveyor.

This information is available at:

• House Rebuild Guide
• House Rebuild Calculator

What steps can I take to prevent underinsurance?

• Adequately setting your sums insured from the start of your policy/last renewal is key to preventing underinsurance.
• Review your sums insured during the policy period if you have made changes, additions or upgrades to you home.
• Check out our tips to avoid underinsurance below in order to best protect you and your home in the event of loss or damage.

Does Zurich Insurance have any safeguards in place to help prevent my home becoming underinsured?

• To help protect you against inflation, we monitor a range of indices and where appropriate, we will adjust your buildings and/or contents sum insured. This is commonly referred to as Index Linking.
• It is important to note that relying on Index-Linking alone may not be sufficient to protect you from underinsurance, especially at renewal or during the policy period if you have made changes, additions or upgrades to your home. It is vital that you review your sum insured regularly to ensure you have adequate cover to meet your needs. For more information on Index Linking, please refer to your policy booklet.

Where can I check how much I insured my home for with Zurich Insurance?

• The sum insured is outlined in your policy schedule.

What is included in the buildings insurance costs?

The cost to rebuild your house including:

• Building materials
• Labour
• Fixtures and fittings such as solar panels, kitchen units, built-in wardrobes, bathroom & sanitary fittings
• External structures such as outbuildings, garages, garden sheds, boundary walls, fences, hedges, plants etc.
• Site clearance and architects' fees

  This is a guide only. Not every house is the same and therefore the rebuild cost will depend on its size and the materials used to build it.

  What is included in contents and personal possessions insurance costs?

• The amount it costs to replace all household goods and personal possessions as new*.
• Include everything you would normally take with you if you sold or moved out of your home.
• An easy way to work out the value of your contents is to go room by room and add up how much each item is valued at, and then consider what it costs to replace these items as new*.
• Another handy tip is to keep receipts and photographs of high valuable items.

  *A deduction for wear and tear will be made on some items such as clothing and footwear and therefore these do not need to be calculated to replace as ‘new’.

  Tips to Avoid Underinsurance

  Start as you mean to continue

  Correctly estimating the amount to insure your home and contents for, including personal possessions, is key in preventing underinsurance.

  Take time when first arranging your policy to check if the amounts you intend to insure your home for are adequate. Remember, failing to arrange adequate cover for your home may lower your chances of covering the cost of repairs or entirely replacing your home in the event of loss or damage (including its contents and personal possessions).

  Consider the following when working out how much cover you need:

• The Society of Chartered Surveyors Ireland (SCSI) provides both a guide and a House Rebuild Calculator to assist you in insuring the buildings of your home.
• They also provide a link to find an expert should you determine your home is best assessed by a local Chartered Quantity Surveyor. 

This information is available at:

• House Rebuild Guide
• House Rebuild Calculator

Don’t set and forget

Reviewing your sum insured regularly is key to preventing underinsurance. In doing so, consider the following:

Additions and upgrades: Upgrades or additions to your home, including contents and personal possessions, may change the amount you need to insure your home for. Items such as a new sofa, laptop, television, or carpets may increase the cost to replace all contents as new. Installing a new kitchen, office, bathroom or fitted wardrobes may require a review of the cost to rebuild your home.

Your policy cover: Whilst underinsurance relates to the amounts you have insured your home for, it is still important to review to your policy cover regularly to ensure it continues to meet your needs, especially if you have made any additions or upgrades.

You can do so by reviewing your policy documentation (Policy Schedule and Statement of Fact) together with your policy booklet.

Keep us informed

Keeping us informed of changes to your home, such as those listed above, will mean you are best protected in the event of a loss or damage.