I02E - Household Insurance

The most valuable asset of many members is their house, and its contents. It is therefore false economy not to insure them or to insure them for an amount below their true worth.

Natural disasters such as Earthquakes are not unknown in Portugal and failure to ensure the building itself adequately could have disastrous consequences.

Again, although loss through fire is not a common occurrence, robberies from houses even when occupied, have increased in frequency and adequate cover for content loss is also highly desirable.

The major problem, which arises when a claim for loss is made under an insurance policy, is the value, which has been placed on both the building itself and the contents. All insurance companies take an averaging approach when assessing claims and will only pay out a proposition of the real value of any item if the declared value is less than the Market or New Value for contents and rebuilding Cost for Buildings.  The temptation in reduce the size of the cover and so the annual premium, must therefore be resisted if problems are to be avoided.

Cover for Buildings
When settling a claim, all insurance companies apply a franquia or ‘Excess’ which requires the policy holder to bear a proportion of the loss. Most companies require the first part of the claim to be borne by the policy holder and you should check the exact amount with your broker.

One problem facing every house owner is what value should be placed on the building and here it is wise to obtain professional advice. For a new house it is much easier to arrive at a meaningful figure while the price paid for second hand property will give at least a reasonable idea of the replacement value. As a rule of thumb, the area of the house in square metres multiplied by €900 - €1,000 for Apartments and €1,000 - €1,250 for Houses/Villas plus an allowance for a pool (€250 by m2) and any special features will provide a reasonable indication. In all cases the value of the land should be excluded.

The rate used to calculate the premium payable on the value placed on the building is lower than all other rates and it is false economy to undervalue the building in order to save a small amount of money.

Contents
Again, the value placed on the contents should be assessed as realistically as possible. So often an insured party finds that the value placed on furniture and other possessions by a professional valuer is considerably higher than had been imagined. Any claim is then met only in part which leads to dissatisfaction with the service provided by the insurer. It is not unusual to find that the value placed on the contents by the insured party is only say half that of a loss adjuster’s estimate which means that only half the value of a stolen item for instance, is paid out.

While under-declaring the value of property for insurance purposes may mean a short-term gain by way of a lower premium payment, it can lead to a much greater monetary loss in the event of a claim.

Public Liability
Although claims arising from damage or injury suffered by third parties on an insured's property are fortunately rare, they can be extremely costly when they do arise. You should check what provision is made for this in the policy and what the alternatives are with your broker. 

Travel Assistance
Some Household policies provide, at no additional charge, the insured person, the insured person's spouse/partner, and children permanently resident with the insured party, with travel assistance starting from 10 kms from the insured address and for a period of up to 60 days per travel abroad. You should check this with your broker.

A wide range of services are provided, particularly when an insured person falls ill or is involved in an accident. Full details of the Liability Limits are set out in the Policy document. 

Cover for other Risks
As well as the standard cover provided by your policy, opportunities may exist for cover against a number of defined risks including the following:

• Electrical Risks 

• Golf Insurance

• Accidental Damage

• All Risks (Europe or Worldwide)

Claims
A good insurance company is happy to settle valid claims promptly and, in this respect, afpop members are fortunate in having access to cover from a company which adopts a very responsible attitude. Inevitably however, some claims are made which need to be investigated before a decision can be taken as to whether cover exists under the terms of the policy and also whether the size of the claim is realistic.

Most brokers have a staff member dedicated to dealing with claims and to providing advice and to assist in formulating a claim in a manner which will receive prompt attention from the underwriter. The first thing any member should do when a situation arises which could result in a claim being made is to contact their Broker.