Monday, 20 April 2009

Be careful with annual house insurance increases

Your home insurance may well include a clause that increases your level of cover by a fixed amount, or perhaps by the Consumer Price Index (CPI) each year. This was appropriate when the cost of building was rising steadily. However, a recent review by the Society of Chartered Surveyors suggests that the cost of rebuilding a home has actually dropped by up to 5% recently.

So when your house insurance is up for its next renewal, check that the rebuilding cost is still a reasonable estimate of how much it would take to rebuild your home.

Two points of caution, though - (1) many people under-insure their homes, grossly underestimating the rebuilding cost of the property. Manke sure you're not one of them. (2) Many policies link the value of the contents to the rebuilding cost, e.g. contents insured for 20% of rebuilding cost. If you choose to amend the rebuilding cost on your house insurance, make sure the contents cover is still appropriate.

Bank of Ireland are reviewing their policy of automatic annual increases. See here.

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