Typically your home or business premises are one of the biggest investments that one will make in their lifetime. Unfortunately, I regularly encounter policyholders who don’t have the correct insurance policy in place, or the correct level of insurance coverage for a property that they own.
In many instances or most cases, little or no consideration is given to the intricacies of the policy, the correct setting of sums insured/value at risk, and in the event of a claim this can leave policyholders thousands, tens or hundreds of thousands out of pocket.
How can you protect your position to avoid being out of pocket in the even of a claim?
At the time of taking out or renewing an insurance policy, it’s typically left up to policyholders to set and declare the sums insured for buildings and contents. Your insurance companies insurance underwriter will price the risk and set the policy premium based on the information, you the policyholder has provided to them. (The onus is on the policyholder or homeowner to supply this information to the insurance company).
When you have a claim in your home, your insurance company will send out a loss adjuster to investigate the claim, take photos, measurements etc, relating to the claim itself and also check to confirm that all the conditions, endorsements and warranties have been complied with.
One of the other roles of the loss adjuster is to measure the building and environs to ensure that the sums insured are adequate, in line with the Society of Chartered Surveyors rebuilding calculator (https://www.scsi.ie/advice/renewing_your_house_insurance_rebuild_calculator). If the value at risk is found to be more than the sum insured, average will apply. Meaning that if you age found to be 25% underinsured, 25% will be deducted off your claim payment, as you are deemed to be self-insured for the % portion, that you are underinsured by.
Very important to get to know the size of the building and use the calculator to correctly assess the correct level of cover. It’s a big issue with Dublin, I’d say that up to 35/40% of claims that I would deal with would have under insurance, from 10-40%. It’s critically important to know the size and rebuilding cost of your building.
Why It’s critically important to tell your insurance company all material facts before and during your insurance policy?
As the insurance policy is based on utmost good faith, all material facts must be disclosed to the insurance company, continually on an ongoing basis. If material facts are not disclosed, in the even of a claim, your policy may be cancelled and claim rejected.
Your insurance policy will have conditions and warranties that must be adhered to, ie if you have an alarm, you have to switch it on, doors and windows must have 5 point locks, you must have working smoke detectors etc. For most people reading through an insurance policy is akin to a form of “medieval torture”, that said, it is vitally important to read through your policy schedule and determine what conditions, warranties, endorsements apply, and decipher how to comply with the aforementioned conditions, warranties and endorsements.
Not all policies are the same and the old adage applies “you get what you pay for”, so be careful what insurance policy you select and don’t just base on price. If you know someone in the insurance industry, ask them to read through and get their advice.
How to avoid buying the wrong insurance policy for your needs? (Probably the most important tip)
I would always recommend getting a reputable local insurance broker to sit down with you and recommend the best possible insurance policy for your needs. A good broker will be a friendly face and will be able to assist you when you have a query, or even help when you have a small claim. They may even pop out to your property and measure your building and advise on sums insured etc.
I deal with hundreds of claims every year and have experience with all insurance carriers, so I’d be more than happy to offer advice to homeowners on what insurance company is reputable from a claims standpoint.