In a recent article, we discussed various funding options available for your home improvement projects. However, what often gets overlooked is the importance of updating your home insurance policy after these renovations. While home improvements are exciting, failing to adjust your insurance coverage can leave you vulnerable to significant risk.
Recent research conducted by Bank of Ireland highlights a concerning trend: 53% of homeowners have made improvements to their homes in the last 5 years, yet fewer than a quarter have updated their insurance coverage.
In this article, we provide an overview of home insurance in Ireland, consider the risks associated with underinsurance, and provide essential tips to ensure you are adequately covered.
Recent research conducted by Bank of Ireland highlights a concerning trend: 53% of homeowners have made improvements to their homes in the last 5 years, yet fewer than a quarter have updated their insurance coverage.
In this article, we provide an overview of home insurance in Ireland, consider the risks associated with underinsurance, and provide essential tips to ensure you are adequately covered.
Understanding Home Insurance in Ireland
Home insurance typically covers your property and its contents against events like fire, theft, and damage. Your home insurance should account for the rebuilding cost of the property, site clearance, and professional fees, while contents insurance should cover everything you would take if you moved today. Conducting a thorough home inventory and consulting with an experienced insurance broker can help you determine the appropriate coverage.
What is Underinsurance?
Underinsurance occurs when the insured value of your home falls short of the actual cost to repair, rebuild, or replace it.
For instance, if your home's rebuilding cost is €300,000 but it is insured for only €225,000 (75% insured), you're 25% underinsured. In the event of partial damage amounting to €10,000, your insurer would cover only 75% of that value (€7,500), leaving you to bear the cost of the remaining €2,500. This oversight can leave you vulnerable in the event of damage or loss, potentially resulting in significant financial strain.
What is the Impact of Home Improvements on Insurance?
Insurers consider your property's value and rebuilding costs, which often increase with home improvements. Therefore, it is crucial that you update your home insurance when you have completed improvements on your home.
Why is Updating your Insurance Important?
- To Protect Your Investment: Home improvements normally boost your property's value. By updating your insurance, you ensure that this investment is adequately safeguarded.
- Avoid Unplanned Expenses: When you are uninsured, you stand the risk of not being fully covered in case of a claim, leading to substantial out-of-pocket expenses.
- Adjusting Premiums: Properly updating your insurance can also impact your premiums. Regularly reviewing and adjusting your policy ensures suitable coverage without overpayment.
Tips for Updating Your Home Insurance
- Regular Reviews: Review your annual home insurance renewal notice. Such reviews are particularly important after you have made home improvements, as improvements may impact the sums insured.
- Accurate Valuation: Ensure that your home is accurately valued, factoring in structural improvements and rising construction costs.
- Comparative Shopping: Shop around and compare insurance quotes to find a policy that meets your needs and budget.
At Which Mortgage, we not only specialise in mortgage but we also offer additional services at the lowest cost, including home insurance. We provide comprehensive solutions to safeguard your home and its value effectively. Don't leave your investment unprotected - update your insurance today.
Robyn Jacobs
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