Claim denied - danger of underinsuranceIf you are wondering why your insurance claim was denied, or you got paid out much less than expected, underinsurance could be the reason.

We are contacted on a daily basis by distressed home or  business owners who got paid only a fraction of their insurance claim. In many cases this is due to being under insured.

Policy holders often reduce the sum insured in order to reduce the cost of their insurance premiums. Unfortunately, this is often to their detriment as in case of a loss, they are only entitled to the proportion of the claim settlement, due to the “average “ clause.

The small print included in the majority of property policies includes a clause, which allows the insurance company to deduct a percentage of the claim settlement in application of average.

Here how this close works. Following a loss e.g. fire, an Insurance Loss Adjuster appointed by your Insurance Company will arrive and measure the property. He will then apply the applicable insurance rate/m2 and add in for outbuildings, extras, fitted wardrobes etc.

If they find that the sum insured is adequate then no deductions are made. If the sum insured is inadequate (you are under insured), they will apply the “average clause” to your insurance settlement.

Average is used to determine the amount your insurance company is liable for following a loss and it is calculated as follows:

  • Let’s assume that Value at Risk of your house, as outlined by the Society of Charted Surveyors, is €300,000 (this depends on a number of factors)
  • Your Sum Insured as specified in the Insurance Policy  is actually €200,000. You are therefore under insured by €100,000
  • Let’s assume that a fire occurs and nearly half of your house is destroyed.
  • As per builders quotes, to have it re-built/repaired it will cost you €120,000. You therefore file an insurance claim for €120,000
  • Unfortunately, as the Sum Insured is only €200,000 instead of €300,000, the insurance company assumes that you are responsible for 33% of the risk on this property. They therefore are only liable to pay our 67% of the claim (this is the average clause)
  • As a result of underinsurance you have to pay €40,000 of repairs out of your own pocket.

This also applies to the contents section of your policy.

We are dealing with claims on a daily basis and in the current economic climate insurers are looking for ways to reduce or refuse cover at every opportunity. It is extremely difficult to get your full entitlement following a loss even when you have 100% adequate cover, so it makes it even more difficult if you are underinsured.

 

Get a Policy Review and Avoid Costly Underinsurance

Insurance policy reviewIn order to avoid this scenario, it is prudent to get a policy review carried out every year and update your Sum Insured, if there are any changes to the value of your house or house contents.

A policy review would help you determine a sufficient level of cover for both the buildings and the house contents. Don’t risk losing thousands in compensation for the sake of saving a hundred Euro in premiums.

 

Contact Details

Insurance Claim Solutions
Golf Rd, Rush, Co. Dublin

Mobile: 086 357 1713
Phone : 01 870 9210

We are registered as Public Loss Assessors and fully regulated by the Central Bank of Ireland

Google Reviews

Custome Reviews
Insurance Claim Solutions
5.0
Based on 164 reviews
powered by Google
Hilary Jordan
Hilary Jordan
17:38 16 May 22
From my first phone conversation with Trevor I felt very confident that I had chosen the right person to help us negotiate through the minefield that is making a claim through your home insurer. Trevor's colleague Craig visited our home and was very sympathetic to our situation after a burst mains pipe. He explained everything he was doing and then dealt with the loss adjustor from our insurance company reducing our stress. We were kept informed during the entire process and even though we were dealt a bit of a curve ball, Trevor negotiated the best result for us and we can't reccomend ICS enough. It was the best decision we could make. As an add-on we would urge anybody reading this review to look at and review your home insurance and protect yourself against underinsurance. Thank you Trevor & Craig
Helen Halpin
Helen Halpin
22:44 08 Feb 22
I can’t recommend Trevor highly enough. After a house fire in Jan 2022, we had no idea what to do next. Thankfully, Trevor was recommended to us, and despite it being a bank holiday, he called to the house and provided all the reassurance we needed at a difficult time. Trevor is exceptionally professional, took care of all the paperwork, navigated through the tricky process with the Insurance company and kept us updated every step of the way. 5* service.
Jo Crawley
Jo Crawley
12:08 08 Dec 21
Great service from Insurance Claim Solutions would highly recommend. Thanks again
Oliver Mitchell
Oliver Mitchell
10:09 02 Dec 21
Trevor came in after we'd already started the claim and realised it was a much bigger issue than we'd originally thought. He stepped in seamlessly and quickly and took over everything, which made our lives far easier. He kept open communication every step of the way and ensured that the whole process went smoothly for us. Would absolutely recommend Insurance claim solutions to anyone.
Eibhlin Ni Ghabhlain
Eibhlin Ni Ghabhlain
10:37 26 Nov 21
It was such a relief to hand over all details of the insurance claim to Trevor when I had a recent mains leak in my house. He more than lived up to the recommendations I had received about his work, efficient, professional, inspiring confidence that all was being dealt with correctly. Within a remarkably short time he had dealt with all details of claim and I’m very happy with what he achieved for me in terms of a settlement. Can highly recommend him!
See All Reviews
js_loader