Surveyors warn homeowners to get adequate rebuilding cover

Inflation in house rebuilding costs has slowed over the past 12 months but homeowners still risk being left out of pocket in the event of an insurance claim, the Society of Chartered Surveyors (SCS) has warned.

The cost of rebuilding houses rose only marginally from July 2003 to July 2004. The highest increase was recorded in the Dublin area, where rebuilding costs rose by up to 4.2 per cent.

This compares to inflation of up to 8.78 per cent over the previous 12-month period.

The SCS published its 2004 guide to house rebuilding costs today in a bid to help homeowners calculate the correct cost of rebuilding their homes in the event of damage caused by risks such as fires and floods.

Mr Gerry O'Sullivan, chairman of the quantity surveying division of the property industry body, has advised homeowners that home insurance policies based on out-of-date rebuilding costs could leave them exposed to extensive construction bills.

"We are pleased to see that costs in rebuilding homes have not risen too dramatically at all in the past year. However, costs are still rising and homeowners should ensure that they have adequate cover," said Mr O'Sullivan.

"Underinsuring can, sadly, in the unfortunate event of a claim, lead to a large gap between what is paid out by the insurance company and the actual costs of rebuilding the home.

"Insuring property for more than it costs to replace, on the other hand, leads to unnecessarily high premiums."

The cost of rebuilding three-bedroom semi-detached houses showed the highest increase in the Dublin and Cork areas, rising by 4.2 per cent in Dublin and 2.85 per cent in Cork.

The second-highest increase was for terraced houses in the capital, which cost 3.5 per cent more to rebuild compared with last year. Reinstatement costs for these properties rose by up to 7.71 per cent in the previous year.

The lowest increases were in Cork and Galway, where the cost of rebuilding detached bungalows rose by just 0.5 per cent.

Rebuilding costs for Waterford and Limerick are, for the first time, included in the SCS guide.

The costs per square foot shown in the table apply to typical estate-type houses built since the 1960s and cover the total rebuilding cost, including demolition, site clearance, professional fees and VAT.

To estimate the minimum amount of buildings insurance they need on their policy, homeowners should multiply the square foot cost by the total floor area of their property.

For example, a typical-sized four-bedroom detached house in Dublin should be insured to a value of at least €210,820, excluding contents insurance.

The sum insured should be increased to allow for better-than-average kitchen fittings, built-in wardrobes and finishes such as wooden floors. Owners of properties with special design features will need an independent survey.

Homeowners should bear in mind that building costs are likely to have risen again since the survey was taken in July.

The SCS guide is available on www.scs.ie or by sending an SAE to the Society of Chartered Surveyors, 5 Wilton Place, Dublin 2.