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
Vincent Hanley
Vincent Hanley
13:59 22 Sep 22
I would be happy to recommend Trevor Kelly (Insurance Claim Solutions) in the event you need to make a claim on your household insurance. We recently had a serious leak in our hot water pipes and Trevor’s prompt attention was the essence of professionalism. It also took the hassle and stress out of dealing with the Insurance Company’s loss adjuster and with the pursuit of our claim. Couldn’t recommend him highly enough and would be very comfortable recommending him to family and friends.
Roger Kear
Roger Kear
10:59 04 Sep 22
The level of service that I received from Trevor Kelly was second to none. This was my first major claim with an Insurer and unsure of the process. Trevor took away all that worry. He was polite, reassuring, punctual and efficient. He dealt will all the details of the claim and completely took away all the hassle. If ever there was a service that I would recommend then it has to be Trevor Kelly. If anyone has the misfortune to make an insurance claim then the first call they should make should be to Trevor Kelly.
Eimear McBride
Eimear McBride
13:13 22 Aug 22
I would highly recommend Trevor's services. He guided me through the process from beginning to end, along with providing helpful advice along the way. He was responsive, efficient, practical and empathetic throughout.
Sherin Mathew
Sherin Mathew
16:42 18 Aug 22
Excellent service.....We went through a tough time and Trevor was there to support us... Proffessional and approachable.... Highly recommending.......
sheila hayes
sheila hayes
09:16 04 Aug 22
I used Trevor's company after I had a leak under my floor, he came recommended to me from leak detectors and the same day as I made the call Craig came out to inspect the damage and he handled everything from there on. I was very anxious as my insurance company had told me they would not cover the damage as I was causing it myself by having to dig up the floor to find the leak but Craig assured me it would be sorted. I am extremely happy with the settlement and the service from Insurance Claim Solutions. I would urge anyone in this position to contact them they take all the worries away.
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