Only around 6% of homeowners who have received a letter from their insurer warning of the possibility that the sum insured on their property may be insufficient say they have adjusted it to the refelct the correct rebuilding cost.
This is according to research carried out for the insurer Aviva which found that around 60% of householders have yet to receive any correspondence from their insurer on the matter.
All home insurance policyholders are due to receive a letter as insurers seek to raise awareness of the risks of being under-insured.
The risks have increased in recent months, mainly owing to rising cost inflation in the construction sector
Aviva urged homeowners to review the rebuilding costs on their home insurance policy against the backdrop of rising costs over the last six months in particular.
Homeowners are at risk of being under-insured in the event of having to claim against their insurance.
The insurer said that it is increasingly seeing evidence that the sums insured are inadequate when dealing with customer claims.
The research revealed that only around 14% of those who have received the letter and plan to act.
Around 8% said they planned to take no action.
16% said they had increased the sum insured to varying degrees.
Customers who are under-insured and who make a claim under their policy may not be fully protected and may not receive the full amount necessary to rebuild or repair their home.
For example, if a home is insured for €300,000 and the current rebuild costs of the property is €400,000, the home is underinsured by €100,000 or 25%.
"If a claim occurs where the damage is estimated to be valued at €100,000 because the property is underinsured by 25% the insured will only receive €75,000. The homeowner will then have to supplement the shortfall if they wish to restore the property to its original specification," Billy Shannon of Aviva explained.
Aviva recommends that customers use the SCSI's house rebuild calculator that is available on its website to satisfy themselves that they are fully covered.
Home insurance customers may increase their cover at any time and do not have to wait for their insurance renewal date to do so.
