Dangers of Under Insurance - Picture of Insurance Policy wordingUnder Insurance | In a nutshell, you need to an insurance policy review carried out periodically to avoid under insurance.

Under insurance is a situation when the sum insured of the insurance policy is less than the re-instatement value of your property. While under insurance may result in lower premiums paid by the policy holder, the loss arising from a claim may far exceed any marginal savings in insurance premiums.

Don’t gamble with your insurance cover. Ensure that you are fully protected by getting an independent policy review to establish correct levels of insurance.

We deal with cases on a daily basis where the home owner or business owners are under insured and following a loss, they only get a fraction of  their claim, due to “the average clause”.

 

Under Insurance and the Average Clause

The majority of property policies include a section, which allows the Insurance Company to deduct a percentage of the claim settlement in application of average. How does the Average Clause work in practice?

 The following is an example of how you can be penalized by the Average Clause

  • When taking out a household insurance policy, you tell the insurer the value of the buildings or contents you want to insure e.g. €200,000
  • The actual Value at Risk (House re-instatement value) as outlined by the Society of Charted Surveyors is €300,000
  • House Sum Insured as per policy is €200,000 (your policy could have been taken out a few years ago and the Sum Insurance was never re-adjusted)
  • A fire occurs and the loss of €120,000 is agreed with insurers
  • Because the actual Value at Risk €300,000 and your insurance is only €200,000, this means that your insurance covers only 66.67% of your house. 33.33% value of your property is regarded as Self Insured.
  • Although your total claim is for €120,000, your insurance company will only pay you out up to €80,000. You will have to cover the remaining €40,000, because your property was under insured.

The average clause also applies to the house contents, so if you made any significant purchases or re-decorated your house, you should also adjust the Sum Insured in your house contents section.

In order to avoid this scenario it is prudent to get a policy review carried out. A policy review or pre-loss survey would recommend a sufficient level of cover for both the buildings and contents cover for insurance purposes.

To find out more or to book an insurance policy review – click here.

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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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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