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Homeowners face huge losses if their property is destroyed – as spiraling construction costs leave most underinsured.

The latest statistics from the Society of Chartered Surveyors Ireland (SCSI) show that reconstruction costs in Galway have soared by 20% in 12 months, and as a result the majority of owners with an insurance policy are seeing their property undervalued .

That’s according to Linda Lyons, claims manager at CMG – the nation’s largest independent loss assessor – who warned that those who fail to update their property valuation face a major shock if they have to claim their police.

And while increasing the value of your property may result in a slight increase in premium, it could cost thousands of dollars more in the event of a tragedy preventing some people from restoring their homes.

“A €50,000 increase in coverage may cost €25 more, but people should shop around. If you are underinsured, you will have a shortfall regardless of the difference when you go to make a claim,” Ms Lyons said.

This meant that if your property was valued at €200,000 but only insured for €120,000 and was totally destroyed by fire, only 60% of the costs would be covered by the insurance, explained Athens expert.

“Insurance companies must love it; for a savings of $50 on your policy, you could save them $30,000 to $50,000 at checkout.

“With rising construction costs, most people will be underinsured and unfortunately it’s up to the policyholder to review their policy. The insurance company will say it’s not their problem, so when you end up with a lower settlement, they’ll say it’s your problem,’ Ms Lyons said.

She said she had seen cases where damage of €20,000 had been caused and the payment was only €8,000, but if an entire property is destroyed by flood or fire, the default winning could be the difference between being able to restore ownership and not.

Additionally, if a property was being rebuilt, this would have to be done to the latest building standards and regulations – and that cost also had to be factored in.

Those looking to make sure they have adequate coverage should use SCSI’s home rebuild calculator on their website as a first port of call.

“Once people know the square footage of their home, they can use it and that’s great.

“The only problem with that is that it doesn’t take into account more bespoke items. You could have a bespoke kitchen worth €100,000 where the average kitchen might be valued at €15,000 and it’s something you have to consider,” Ms. Lyons said.

Those who want the most accurate valuation can get one by using the services of companies like CMG, who can perform a value-at-risk survey.

“I am also happy to take a call from anyone who needs advice. Unfortunately this is something that people have to look at every year and the way things are going with price increases I would say it is necessary.

“We all want the cheapest policy we can get, but it’s only when you have a claim that you properly review a policy and then it’s too late,” Ms Lyons said.