'One in every six home insurance claimants are underinsured'

Some four in ten Irish homeowners have received a letter from their insurer warning that the sum insured on their property may be insufficient due to the rising costs of rebuilding a home. However, of those recipients only 6% reported having increased their sum insured to the correct rebuilding cost. This is one of the key findings of a survey of 600 homeowners across the country conducted by iReach Insights on behalf of Aviva Insurance Ireland DAC (Aviva).

All home insurance policyholders are due to receive this letter as insurers proactively seek to raise awareness of the risks of being under-insured.

Aviva is urging homeowners to review the rebuilding costs on their home insurance policy as these costs have increased substantially over the last six months. The company warned homeowners that they are at risk of being under-insured in the unfortunate event of a claim.

The Aviva research found that most people (6 in 10) have not yet received a letter from their insurer. More than 1 in 10 have received the letter and plan to act (14%). Fewer than 1 in 10 don’t plan to act (8%)

Some 16% have already increased the sum insured to varying degrees

Of those who have received the letter but have yet to act, one in five said they simply cannot afford to pay any more – this is a bigger issue for households with children (38%) and those in the 35–44-year age bracket (33%)

Two in five say, that based on a policy review, they are satisfied that there sum insured is already sufficient, while one in three of homeowners say it’s on their to-do list but that they just haven’t gotten around to it

Commenting Billy Shannon of Aviva said: “Rising inflation and increases in material and building costs have seen the Society of Chartered Surveyors Ireland (SCSI) increase the rebuild rates last September, with significant increases of between 15% to 44% set. This is at complete variance to the previous rate increases published by the SCSI where rates would have increased by 4%-8%. Anyone who has ever had to make a claim on their policy will appreciate that it can be a stressful time and, as insurers, we want to avoid having to add to the stress by telling our customers that they are under-insured.

“We have written to all our home insurance customers encouraging them to review their sums insured so that they have the correct cover in place. However, the response level from customers to date has been low. From a claims’ perspective, we are seeing evidence of under insurance in c. 16% of claims received to date and we expect that this figure will continue to rise unless action is taken.