Zurich writing to customers about House Underinsurance

Muahahaha

Just a heads up, Zurich wrote to me about houses being underinsured so Id presume this has been coming up as a problem when construction and matierals costs have risen so sharply in the last couple of years, circa 30% price increases I believe

The example they give on the letter is of a house that is insured for 225k to completely rebuild it but the actual cost of rebuilding could now be 300k. In that instance they deem you to be only 75% insured and only pay out that amount in the event of an entire rebuild. But underinsuring also has implications on even smaller claims. The example they give is that if you had a claim of 10k they would see you are 25% underinsured overall and only pay out 7,500 of that 10k claim. They call this process the 'condition of averages'.

The SCSI have a rebuild calculator here https://scsi.ie/consumer/build/calculator/ but of note that the figure it arrives at is a minimum specced house in terms of fixtures & fittings. So if you had high end bathrooms and solid wood floors then that wouldnt be covered, they will only cover the most budget of ranges.

daheff

its a tough one. if you under insure you won't get fully compensated. Same if you over insure.

coylemj

https://www.boards.ie/discussion/comment/120147107#Comment_120147107

I don't think they will under compensate you if you're overinsured, you'll just be paying them too much. Same applies with fully comp. motor insurance.

Muahahaha

Just an update to this, turns out going by the RCSI rebuild costs calculator I was underinsured by 50k. I used that calculator on a policy taken out in August 2021 and insured for that so it has definitely been re-calibrated lately to reflect the cost of building matierals, labour, etc going up. I am guessing this is why Zurich are writing to customers about underinsurance becasue they know loads of their customers could not rebuild their house for what it is insured for.

It should also be noted that the rebuild cost given on that calculator is the "minimum cost" of a full rebuild. With that in mind I insured it for an extra 75k just to have a bit of contingency and I also upped the contents from 40k to 50k. For that I paid Zurich an extra 18 euro and the policy has about 6 months remaining. So its about 40 euro extra a year but at least the house is now insured for what it would actually cost to rebuild it.

Would advise others to check their rebuild costs becasue with rebuilding costs increased it is likely thousands of people are now underinsured. With their averaging system if you do need to claim you will get a % of what you are underinsured by. It can easily leave someone 100k or more short to rebuild their house if they are underinsured so beware of the pitfall here.