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

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Custome Reviews
Karl Spratt
Karl Spratt
16:47 28 Nov 22
Recently had a bad leak in our upstairs bathroom, I was recommended Trevor from Insurance Claims Solutions. The best thing I ever did, Trevor and the Team at Insurance Claim Solutions made everything hassle free, they dealt with all aspects of our claim. Trevor is an exceptional insurance agent who is prompt, efficient, knowledgeable and friendly. Trevor guided my through the process ensuring the outcome for me was his priority. 100% recommend Trevor from Insurance Claims Solutions, if I could give him more than 5 stars I would!
Susie Webster
Susie Webster
12:35 03 Nov 22
Recently had a bad leak in my bungalow, was recommended Trevor from Insurance Claims Solutions. The best thing I ever did, Trevor is an exceptional insurance agent who is prompt, efficient, knowledgeable and friendly. Trevor guided my through the process ensuring the outcome for me was his priority. 100% recommend Trevor from Insurance Claims Solutions, if I could give him more than 5 stars I would!
N roy
N roy
19:20 23 Oct 22
Trevor was recommended to us only 4 weeks ago. We had a leak in kitchen which we thought would need just a new floor. Trevor came in and from that moment onwards we were in safe hands, far more damage than we ever thought thanks to Trevor, he did all the work with our insurance company, no hassles at all. If you have something happen at home and are thinking of using your insurance look no further than Trevor. His knowledge his second to none, best decision we have made in years. 5 stars isn't enough.ThanksNigel and Mags
Graham Nugent
Graham Nugent
09:24 20 Oct 22
I am delighted to recommend Insurance Claim Solutions to anyone facing a need to submit a home insurance claim. We had a significant escape of water from our attic tank while we were away, and came home to quite a smelly mess and water damage. We contacted Insurance Claim Solutions and really appreciated Trevor Kelly's attention to detail, and his professionalism. Trevor is a really good communicator and he is friendly, he took away all of the hassle and bureacracy for us; and as an industry expert he was thorough in preparing our claim and negotiating on our behalf. We handed everything over to Trevor and had no regrets; now that the claim has been settled, we could not be more satisfied. Thank you Trevor.
Eoin Donohoe
Eoin Donohoe
09:21 30 Sep 22
I recently worked with Trevor on a housing claim that required experienced support from a top quality professional. Trevor certainly is a high quality professional who provided great support. Trevor is a great communicator and was extremely good at keeping me up to date on how the process was progressing. He kept me reassured that the issue had his focus and commitment at all times. I would highly recommend Trevor.
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