Rebuilding costs have increased dramatically in recent years – it is vital that you have the correct cover on your building.
Due to a variety of reasons, the cost of rebuilding has increased dramatically in recent years. As a result property owners may find that the rebuilding value that they have their property insured for is a lot less than it needs to be.
What difference does it make, I’m sure I can rebuild it for the lower amount!
Unfortunately, it doesn’t work like that with insurance policies.
Most property insurance policies have what is called as the average clause built in. This means that in the event of a claim of any sort, an assessor will work out the correct rebuilding cost of your premises (taking into account signage, car parks, clearing costs etc). When he comes to the correct rebuilding figure, if this doesn’t match the figure that you are insured for, he will reduce your claim by the percentage you are under insured by. Here’s an example of how it could work:
Fire claim = €36,000. Current Rebuilding value of premises €120,000. Correct rebuilding value according to assessor = €240,000. Percentage under insured by = 50%.
Fire claim = €36,000 – underinsurance of 50% = Insurance company offer of payment = €18,000
Ok I think I might be underinsured. How do I go about insuring my building correctly?
To be sure of the correct rebuilding figure, it is worth using a professional such as a quantity surveyor or independent assessor to have your building and contents valued. It is a relatively small cost compared to the potential cost of being under insured.
Alternatively we have rebuilding guides that we have received from Assessors that will help you to work out the correct figure, contact our Motor trade insurance department on (061)226722 or Email Motortrade@powerinsurances.ie for more details.