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What can under-insurace cost you?

Homeowners are losing out on millions of euro worth of insurance claims because they under-insure their houses.

Property owners who scrimp on insurance are left liable for huge proportions of the cost of repair work if they property is damaged. A leading loss assessor has worked out that owners are losing more than €7m a year in claims settlements due to under-insurance.  Manicle Property Claims says some households are deliberately under-valuing their property to save money on premiums.  But they risk being thousands of euro out of pocket if they are unlucky enough to have to make a claim on their insurance due to a fire, a burglary, flood or other mishap.

Loss assessor Sean Manicle said: "We have found in our dealings with homeowners that up to one in five people are under-insuring their home."

Many people mistakenly insure their house for its market value. Mr Manicle said the property should be insured for what it costs to demolish it and rebuild it, including the removal of debris and professional fees such as the cost of engaging an architect or an engineer.  Another reason for under-insuring was to save money, Mr Manicle, of Kilkenny-based Manicle Property Claims, said.  "Some property owners are deliberately under-insuring their property believing they will save on premiums. However, in reality the savings are often minimal but the serious financial consequences are a lot more severe than envisaged."

The insurance claims specialist worked out that property owners nationally lost out on more than €7m in 2013, the last year for which figures on claims values have been published by Insurance Ireland.  He said he recently dealt with a claim outside Dublin where a domestic oil tank leaked and oil got under the entire house. The property was insured for €300,000. The cost of the works to clean up the oil leak was €200,000 due to the major structural works required.

Demolition: Mr Manicle said: "There is help out there to easily calculate the demolition and rebuild value of a property. We recommend that homeowners use the rebuild calculator on the Society of Chartered Surveyors Ireland (SCSI) website."  He said insurers would argue that the SCSI values are the minimum values that you should use when calculating the insured sum of your property.

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