Purchase Price – Rebuilding Cost and Price of Insurance | House Insurance
We all know that you must be fully insured. Premiums are calculated on your sums insured. Your Sum insured should be based on the rebuilding cost of the Property and the Contents on the Replacement Cost. It is quite simple really; if you imagine your house burnt down, the sum insured should represent how much it would cost to rebuild your house.
However, because of the confusion between purchase price and rebuilding cost, the Society of Chartered Surveyors in Ireland (SCSI) has warned that homeowners may be overpaying for house insurance.
The SCSI’s Rowena Quinn, who is managing partner of Hunters Estate Agents, said some customers were carrying 50 per cent more home insurance cover than they could ever claim – and overpaying on their insurance premium as a result. She said that the most common mistake homeowners made was to confuse the market value of a property with its rebuild cost.
In the latest edition of its annual guide for house rebuilding costs, an average three-bedroom semi-detached house in Donegal costs €85,000. However the rebuilding cost based on its guide is €117,000. Compared to a similar property in Dublin which might sell for €350,000, but has a rebuild cost of €181,000.
Before you rush out and reduce your Sums Insured, make sure you get your figures from a reputable and trusted source. If you are under-insured, it WILL reduce your claim. If you need any further information, please do not hesitate to contact us.