BY JOHN ELLIS, FINANCIAL ADVISOR
Met Eireann at time of writing is advising of plummeting temperatures with snow and sleet forecast for some areas with the danger that homeowners could face bills running into the tens of thousands, or more, if a burst pipe causes damage to their home in the upcoming Big Freeze – even if they have home insurance. This is because many homeowners are underinsured.
Under-insurance is where your home is insured for less than the full rebuild cost or where the contents in your home are insured for less than it would cost to replace them. More homeowners are getting caught out by underinsurance today – and are facing huge and unexpected repair bills as a result. Many are at risk of only getting a fraction of the claim they expect from their insurer if their house is damaged.
According to Paul Walsh, CEO of Peopl.ie: “Burst pipes are one of the most common problems during icy weather. A burst pipe could cost tens of thousands euro worth of damage if water is left running for a few days. The bill for the damage could even be more if a pipe bursts while you’re away as you’ll likely have to replace plasterboard, walls, wardrobes, kitchen units and so on – and you’ll probably have to repair electrical damage too. You could have to foot a big chunk of such damage repair bills yourself if you have underinsured your home – because your insurer will usually reduce its pay-out by the amount you’ve underinsured yourself by.”
A report by the Central Bank recently found that about one in six (16.5%) Irish homeowners are underinsured. One of the main reasons people are underinsured is rising building costs. People have underinsured their home by between 30% and even 50%. This is a very dangerous position to be in ahead of a cold snap with some people previously hit having to take out loans to cover repair bills on their home because they were underinsured and had no rainy day fund to fall back on.
It is important for homeowners to know that the onus is on them to ensure their home is insured for the correct figure. People worry that their home insurance will be more expensive if they increase the sums insured but whatever the cost it would be nothing in comparison to the damage unchecked running water can cause in a few hours let alone a few days.
So, as the cold snap approaches, Peopl.ie is urging homeowners to make sure the building and contents insured amounts are correct. But there are a few practical steps that we can take to prevent a claim happening in the first place.
Make sure the water tank and pipes in your attic are properly lagged or insulated. Don’t forget any pipes in unheated or draughty places, such as basements or garages – or outdoor pipes. Should your home have a well, make sure you have insulated any outdoor well pipes.
Insulate or wrap a towel around any outside taps to prevent them from freezing. Repair leaking or dripping taps or pipes. Find out where the stopcock and especially the key is – and how to use it to turn off the water supply if your pipes burst.
Drain the water system if you’ve a holiday home that will be unoccupied during the winter months.
Don’t ignore signs of excessive mould in a shower or bathroom – particularly if you find mushrooms growing in it! In situations like this, there could be a burst pipe running undetected behind your shower tiles or wall already.
Run the heating for short periods to keep the pipes from freezing and to keep the water circulating, if you can. The heating does not need to be set to normal room temperature – even a temperature of 10-12 degrees will work equally well. And open your attic trap door to allow heat from the house to circulate through the attic.
Pin the emergency help number for your insurer onto your notice board so that if you have an escape of water from frozen pipes, you can call-out the home emergency team straight away.
If you do unfortunately have a claim for burst pipes or tanks, turn the water off, contact your insurer before you pay for repairs and take pictures of the damage to support your claim. You should also let frozen pipes thaw out naturally – do not heat them prematurely as they are likely to crack.