# Increase in building costs- Are people now underinsured?



## rustbucket

With a huge increase in building costs in the last year (materials, labour and a shortage of builders) I’m wondering what impact this has on house insurance policies?

Are building costs automatically increased with inflation for insurance purposes or should we all be increasing the rebuild costs on house insurance policies?

My insurance rebuild costs were x when policy was taken out. Rebuild costs are now y or z.

What if my house burns down in the morning. Am I now under insured?


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## PMU

You could check out the House Rebuild Calculator of the Society of Chartered Surveyors Ireland  https://scsi.ie/consumer/build/house-rebuild-calculator/


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## Roro999

Bearing this in mind upped my buildings cover from 300k to 400k.


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## ClubMan

Roro999 said:


> Bearing this in mind upped my buildings cover from 300k to 400k.


Sounds like a very hefty increase. 33%! Did you cross check your estimate of the rebuilding cost against the SCS ready reckoner allowing for the fact that that's just a guideline? You could be overinsuring for no point.


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## Roro999

Did'nt cross check. A builder advised me.


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## odyssey06

PMU said:


> You could check out the House Rebuild Calculator of the Society of Chartered Surveyors Ireland  https://scsi.ie/consumer/build/house-rebuild-calculator/


I had a quick look but that still says "2021" which suggests it hasn't been updated to take into account the surge in costs over the last 6 months.


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## rustbucket

Well materials alone are at least up by 30%. My builder today told me in the last 18 months Steel on its own for rsjs is up 120%. Don’t know if that’s true or not


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## Slim

Rebuilding costs gave risen so much over the pandemic period that most people are probably underinsured if they haven't increased their building cover over that time. We had a substantial claim 3 years ago and the insurance payout was reduced by 25%. I check scsi.ie every year now. Just renewed a week ago and rebuilding cost has increased by 15% over the past 12 months.


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## Roro999

Slim said:


> Rebuilding costs gave risen so much over the pandemic period that most people are probably underinsured if they haven't increased their building cover over that time. We had a substantial claim 3 years ago and the insurance payout was reduced by 25%. I check scsi.ie every year now. Just renewed a week ago and rebuilding cost has increased by 15% over the past 12 months.


Why was the insurance payout reduced by 25% ?


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## Slim

Roro999 said:


> Why was the insurance payout reduced by 25% ?


I had knocked the insurance company's estimated rebuilding value back to what I believed was a realistic value for this area. I was deemed to be underinsured!


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## Roro999

Slim said:


> I had knocked the insurance company's estimated rebuilding value back to what I believed was a realistic value for this area. I was deemed to be underinsured!


Ouch


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## roker

I have just increased the rebuild cost of my house (note this is not the market value) the insurance company will not quote you a price if you give them details of your house, but will reduce the pay out if you under value. I took it from the Charted Surveyors site,  but could not understand how my 3 bed semi was more than a 4 bed semi,. How reliable is it


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## NoRegretsCoyote

Naive question, but why don't insurance companies do this automatically on renewal? Most people don't have a clue how much building costs are changing, if at all.

This is the way it works for insuring cars AFAIK. Cover is modelled off the age and make.


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## ClubMan

NoRegretsCoyote said:


> Naive question, but why don't insurance companies do this automatically on renewal? Most people don't have a clue how much building costs are changing, if at all.


Most home insurance policies offer the option to index link the cover. But then people moan because their premium has gone up...


NoRegretsCoyote said:


> This is the way it works for insuring cars AFAIK. Cover is modelled off the age and make.


Not in my experience. Unless I changed the insured value it stayed the same year after year even though it was depreciating in value. This has been the case with several insurers.


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## Sconeandjam

Slim said:


> I had knocked the insurance company's estimated rebuilding value back to what I believed was a realistic value for this area. I was deemed to be underinsured!


I found out a few days ago that if you have a shed or garage and walls  not attached to the house they should added to your policy. You should also add extra for your decking and garden walls. Maybe that is where you could be underinsured. There is a tolerance of a certain percentage but each company has a different. 
Maybe engage a loss adjuster if your insurance company is under estimating the cost of the damage. You have that option in your policy.


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## NoRegretsCoyote

My recent experience is that home insurance is cheaper than a year ago and they will give you a big discount on renewal.

CSO data for insurance connected to the dwelling suggests it's fallen 2% in the last year.


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## jpd

While building costs affect the price of the insurance premium, so do claims - fewer claims equals lower prices


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## Slim

Sconeandjam said:


> I found out a few days ago that if you have a shed or garage and walls  not attached to the house they should added to your policy. You should also add extra for your decking and garden walls. Maybe that is where you could be underinsured. There is a tolerance of a certain percentage but each company has a different.
> Maybe engage a loss adjuster if your insurance company is under estimating the cost of the damage. You have that option in your policy.


No. The estimated under insurance was based on the size of the house  excluding garage, shed and decking. I did employ an expert in insurance claims and he was brilliant.


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## Sconeandjam

Slim said:


> No. The estimated under insurance was based on the size of the house  excluding garage, shed and decking. I did employ an expert in insurance claims and he was brilliant.


Did I pick this up wrong then? The loss adjuster working for us told us the above information and that the insurance company use google maps first to assess the size of the property and then when the call out then adjust accordingly. Our policy maybe includes outside shed etc. Have to double check this.
There is usually a tolerance of say 15% so if you are under insured then they can be flexible up to a point.


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## Slim

Sconeandjam said:


> Did I pick this up wrong then? The loss adjuster working for us told us the above information and that the insurance company use google maps first to assess the size of the property and then when the call out then adjust accordingly. Our policy maybe includes outside shed etc. Have to double check this.
> There is usually a tolerance of say 15% so if you are under insured then they can be flexible up to a point.


Don't get me wrong, I'm not saying that your source is inaccurate, just what happened in our case. There was no flexibility with RSA but I was told that AXA would have been flexible. Not worth the risk of being underinsured, in my opinion.


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## bish123

SCSI calculator doesn't go above 4 bed detached or more than 146 sq. Meter


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## bish123

Is there any other source where I can get this estimate


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## Sconeandjam

Slim said:


> Don't get me wrong, I'm not saying that your source is inaccurate, just what happened in our case. There was no flexibility with RSA but I was told that AXA would have been flexible. Not worth the risk of being underinsured, in my opinion.


If you are under insured do they not just reduce the claim amount by the under insured bit? E.g. 15/20%.


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## Slim

Sconeandjam said:


> If you are under insured do they not just reduce the claim amount by the under insured bit? E.g. 15/20%.


Exactly!


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## Sconeandjam

Slim said:


> Don't get me wrong, I'm not saying that your source is inaccurate, just what happened in our case. There was no flexibility with RSA but I was told that AXA would have been flexible. Not worth the risk of being underinsured, in my opinion.


We are with RSA through BOI mortgage. Never claimed on the policy and over 16years with them. We have been advised to increase by €27k before next renewal.
I think at the end of the day it really depends on who is inspecting the damage in the house and how they value the work needed to be done.


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## Leo

Sconeandjam said:


> I think at the end of the day it really depends on who is inspecting the damage in the house and how they value the work needed to be done.


It's not the assessors job to determine if you're under insured or not or to what level the payout will be, some of the contents of their report will inform those decisions, but they have no say.


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## Sconeandjam

Leo said:


> It's not the assessors job to determine if you're under insured or not or to what level the payout will be, some of the contents of their report will inform those decisions, but they have no say.


Would the insurance companies assessor have a rebuild figure in their mind based on the house and contents? 
You have an insurance based on rebuild and content cost you have provided. They would compare what you are insured and what they think the overall cost would be for rebuild and if your figure is less then theirs they would decide if they will pay out or deduct a percentage based on the under insured amount.


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## Leo

Sconeandjam said:


> Would the insurance companies assessor have a rebuild figure in their mind based on the house and contents?
> You have an insurance based on rebuild and content cost you have provided. They would compare what you are insured and what they think the overall cost would be for rebuild and if your figure is less then theirs they would decide if they will pay out or deduct a percentage based on the under insured amount.


The assessor will provide details of the property, it is the insurance company who will then decide on whether you are sufficiently covered. The odds are greatly stacked in their favour .


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## roker

rustbucket said:


> With a huge increase in building costs in the last year (materials, labour and a shortage of builders) I’m wondering what impact this has on house insurance policies?
> 
> Are building costs automatically increased with inflation for insurance purposes or should we all be increasing the rebuild costs on house insurance policies?
> 
> My insurance rebuild costs were x when policy was taken out. Rebuild costs are now y or z.
> 
> What if my house burns down in the morning. Am I now under insured?


The insurance is not solely for building, it takes in burglary, is the cost of burglary also gone up


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## odyssey06

roker said:


> The insurance is not solely for building, it takes in burglary, is the cost of burglary also gone up


Burglary would impact on the premium rating for Contents cover, which is listed separately to Buildings cover.


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