At REA Seamus Carthy we regularly receive queries from clients as to the level of insurance cover needed for their properties. There is still confusion among some property owners as to how much a house should be insured for. Generally, this confusion arises from the differences between the market value of a house and the cost of rebuilding it (the reinstatement cost), with some people insuring their houses for the market value and not the reinstatement value.
For example, if a house costs €120k to rebuild but is in an area where demand is weak, the market value may be only €100k. If the owners have insured it for just the market value, in the event that it has to be totally rebuilt, they will only be able to claim €100k and will have to pay €20k themselves.
On the other hand if the house is in an area where prices are high, the market value may greatly exceed the reinstatement cost. If the market value is €350k it may be insured for that amount even though the rebuild cost might be only €180k. In this case the owner is paying for €170k of insurance they don’t need and can never claim.
As this shows, it is very important to have a house insured for the correct amount. If it isn’t, the insurance may not even cover the full cost of partial repairs.
To assist owners in calculating the correct amount of insurance they should have for their property, contact Seamus Carthy or Aishleen O’Toole at REA Seamus Carthy, Goff Street, Roscommon. Tel: 090-6630001.
As members of the Society of Chartered Surveyors of Ireland and Registered Valuers, you can be assured of confidential, independent and professional advice.