Research from insurance company Aviva reveals that 16 per cent of home insurance claimants are currently underinsured.
Aviva revealed that 4 in 10 Irish households have received a letter warning that the sum insured on their property may be insufficient due to the rising costs rebuilding a home.
They have warned homeowners to review the costs of rebuilding their home in the unfortunate event of a claim, with the company experiencing households underinsured when making a claim.
The research found 60 per cent of homeowners has not received a reminder from their insurance company, with 14 per cent of those who have planning to update their insurance.
One in five households cannot afford to pay more to their insurance company, particularly those with families, while 22 per cent of people admitting they don't know how to calculate the correct amount.
Customers who are under-insured and who make a claim under their policy may not be fully protected and may not receive the full amount necessary to rebuild or repair their home.
Billy Shannon of Aviva said: “Rising inflation and increases in material and building costs have seen the Society of Chartered Surveyors Ireland (SCSI) increase the rebuild rates last September, with significant increases of between 15 per cent to 44 per cent set. This is at complete variance to the previous rate increases published by the SCSI where rates would have increased by 4 per cent-8 per cent.
“We have written to all our home insurance customers encouraging them to review their sums insured so that they have the correct cover in place. However, the response level from customers to date has been low. From a claims’ perspective, we are seeing evidence of under insurance in c. 16% of claims received to date, and we expect that this figure will continue to rise unless action is taken.
"While the increased rates are considerable it does not necessarily mean that premiums will increase by the same amount. We would encourage homeowners to take the time to review their cover and make the necessary adjustment to ensure they are fully covered”
