There’s nothing like a big number to frighten consumers, especially when it comes to them being left out of pocket at a time of crisis.
Insurer Outsurance this week estimated that many homeowners could be undervaluing the cost of rebuilding or replacing their homes by about €83,000
Underinsurance can very quickly turn a drama into a financial crisis. Bad enough to have your home hit by flood, fire or other catastrophe without discovering your insurer will not cover the cost of putting things right.
People assume that if they have, say, €400,000 of insurance cover, any claim up to that value will be met. But that’s not the way it works.
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If the cost of rebuilding your home is €600,000 but you only have cover for two-thirds of that (€400,000), the insurer will only cover two-thirds of every claim – even one for say €20,000 to repair flood damage – leaving homeowners thousands of euro out of pocket.
No one actually knows how pervasive the problem is.
Back in 2021, the Central Bank of Ireland sent a shot across insurers’ bows after a study by its staff discovered the level of underinsurance had surged from 6.5 per cent in 2017 to 16.5 per cent – not far short of 400,000 homes.
That figure, like the Outsurance average, emerged only from an analysis of actual claims made. We have no way of knowing how many others are underinsured. That’s not helped by the insurers themselves, Outsurance included, being remarkably coy on the subject.
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In answer to a parliamentary question late last year, then minister for finance Paschal Donohoe said the figure had fallen to 10.7 per cent in 2024. Even if that claim reflects the wider market, there are still more than 230,000 homeowners at risk.
As Bank of Ireland noted in 2026, the trend over recent years to invest in upgrading and extending properties, including retrofits, solar panels and the like, could be making things worse.
All increase the rebuilding cost in case of disaster, but the bank found that six in 10 homeowners never update their insurance details after investing to improve their homes.
With winter looming, now would be a good time to make sure you have the cover you think you have ... before anything goes wrong.
