Letter warning about being underinsured on the way to everyone with a home policy

Good man Charlie.

I got a letter from my insurer and followed the advice.

I've often wondered what is counted as rebuilding costs and what isn't

From what I can tell the basic calculation factors in the costs of rebuilding the house up to the fit out stage, and you can add extras for the kitchens, bathrooms and other fixtures

But realistically are people going to be adding a lot on for those? I guess if you had a designer kitchen you might want to, but frankly if my house got burned down I'd be happy for everyone to escape unharmed and to have a roof over my head again, eventually. If that means I've got an IKEA kitchen with beko appliances then so be it

I don't see how that could happen without costing you something unless you made the rebuilding costs very high. And then is it worth it paying the extra premium for it over the long run?

The other thing I find confusing is the difference between contents and rebuilding costs. I presume things like sofas and beds are under contents and not rebuilding. Again I don't really see any reason to go with higher than the minimum amount unless you've got some very expensive furniture that you'd want to replace

What are other people's views on this?

EDIT: Okay so to answer my own question to some extent the building cover is defined as the building, it's fixtures, fittings, services and interior decorations (and a whole bunch of other stuff but not hot tubs or spas, for some reason)

Contents is defined as your belongings within the house, with some exclusions (including drones and UAVs, which seem a tad arbitrary 🤷‍♂️)

So the basic rule seems to be that if you can move it about it's contents, if it's stuck in place then it's the building

One thing I've learnt about insurance companies over the years.. They love taking in your premiums and even better if they can be increased. But they hate paying out!

I got a letter from my insurer (Zurich) about this at the start of the year.

So did I. I used the website and got a figure of 260. I insured for 300.

If disaster does happen, I don't want any argueing. There would be enough stress

The partial damage I fully understand.

If I insure for 300 and my house is worth 400 then I get 75% of any damage. If it costs 270 to rebuild then I was in fact over insured and I get 270. If it costs 400 to rebuild then I get 75% of that, which is 300.

Taken from the link above,

For example, in the case of a house insured for €270,000, where the total reinstatement cost was €360,000, the insured party may only receive €270,000 to reinstate the house in the event of the total loss. In that situation the insured party may be obliged to provide the balance of €90,000. Similarly, if there is a partial loss, which costs €60,000 to repair, the insured party may only receive €45,000 and would have to provide the balance of €15,000.

I wonder what data the calculator uses to determine the cost per square meter

For example, it probably costs less per square meter for a developer to build 200 houses in an estate since they can get better economy of scale

Whereas a rebuild and repair would essentially be a one off job, adding extra costs

In addition, given the construction industry is a tad busy at the moment, I wonder how long it takes to actually commence the rebuilding work

I imagine between getting the insurance payout and contracting a builder to do the repair work you'd be doing well to start rebuilding within 6 months

In the meantime you have to pay rent on somewhere to live, plus mortgage payments on your burnt down house

It looks like insurance will cover some of it, Aviva for example covers temporary accommodation up to 15% of the insured value.

For an insured value of €300,000 that's €45,000 potentially, which is probably enough to cover rent during the rebuilding work

Just another thing to consider

Using the calculator you'd basically add in the extra floor area of the renovations

You could also get the house professionally valued, should be more accurate