Ciaran Brady in his Mullahoran office.

Under insurance can lead to big problems

Not having adequate home insurance can lead to serious financial implications for homeowners, according to Ciaran Brady of John Brady Insurances.

“Around 50% of houses in the country are underinsured,” he estimates.

“We’re supposed to follow the chartered surveyor’s guidelines of a certain amount per metre squared in each county. In Cavan, this varies between €1800-€ 2,200, depending on the standard of the house,” he explains.

Ciaran explains that insurance companies are more stringent when it comes to paying out for houses that are underinsured.

“It’s important that people are insured to the right amount because insurance companies are applying the law of average. If you have a house that’s worth €400,000 and you insure it for €200,000 and it’s burned to the ground then you’ll only get a payout of €100,000.

In the past, after a claim was settled, companies advised people they need to increase their sums insured up to the right amount. But now they’re not doing that, they are cutting the claim by the percentage the person is underinsured.”

He explains that it’s important to sort the issue out as soon as possible, particularly given construction inflation in recent years.

“It’s important to increase your insurance to the correct level. You can do this mid-term, you don’t need to wait until the end of the term. It’s important to do this right away.”

Ciaran explains that there are different ways to figure out the value of your house.

“If you’re unsure, you can get a house valuation or you can look up the chartered surveyor society website and look at the rebuild cost of your house per square metre and multiply it by the size of your house. It may not add much to the cost of a policy. It depends on how much you are underinsured by, if it’s a small amount, it won’t increase by much,” he outlines.

Another issue with insurance is when claims become invalid, which Ciaran explains.

“It’s not uncommon for a home insurance policy to be deemed invalid when you go to make a claim. This will result in claims not being paid, even if they’re genuine, so it’s vital to make sure you’re not accidentally invalidating your policy.”

He explains that insurance can become invalidated for several reasons.

“Non-disclosure can result in the policy becoming invalid. This occurs when you fail to disclose necessary information to your insurer when taking out a policy. If, for example, you don’t disclose that you rent your house or apartment out, you could invalidate your policy. So, if you run an Airbnb, you must let your insurer know as this is considered a commercial business.”

Another reason is not utilising security measures as Ciaran explains.

“If you’ve informed your insurer that you have an alarm installed, you’ll likely have received a discount. Make sure you set the alarm whenever you leave the house unoccupied because, if your house is burgled and the alarm isn’t on, this could invalidate your claim.”

Ciaran explains the value of using an insurance broker as the benefits outweigh the costs.

“Just like an accountant or lawyer, based on years of experience and training, an insurance broker can provide the same professional advice to you on your insurance needs. As insurance is such an important and potentially costly aspect of everyday life, you can never have too much expert advice when it comes to making such important decisions. Insurance brokers utilise their industry knowledge and experience by doing the ‘leg work’ and will quickly source the best and most suitable insurance deal available.”

He also explains how insurance brokers provide important guidance when dealing with issues regarding claims.

“In the event of a claim or query, an insurance broker will guide their clients through the process and effectively manage the claim on their behalf. They are regulated by the Central Bank of Ireland so that consumers are secure and protected at all times.”