Consumers warned of over-paying for home insurance if they buy through bank
Published 24/08/2016 | 13:02
Consumers have been warned they may be over-paying for their home insurance if they get it through a bank.
It comes after the latest figures showed home insurance premiums have risen by 11pc in the past year.
Now a survey has shown that banks are among the most expensive providers of home insurance.
The results of the survey show that householders may be over-paying by up to €300 a year by opting to take cover out through their bank.
This is because there are price gaps of up to 100pc across the market, according to Jonathan Hehir of brokerage Insuremyhouse.ie.
His firm did a survey using five standard sample customers, and contrasted premiums from the banks compared with a typical online broker.
The results showed the price differential reached several hundred euro.
“There are huge differences in the prices people pay for the same cover – a difference of over €300. “There are not many households that can afford to pass up a saving like that,” Mr Hehir said.
He said people may feel safe going to just one provider to get a good rate, as home insurance rates are not rising as fast as car insurance. But he advised against this.
The survey, carried out by staff at Insuremyhouse.ie, shows that insuring a bungalow in Ballingarry, Co Limerick, costs €231 from a broker and €530 from a bank, a difference of almost €300, Insuremyhouse.ie said.
A detached house in Lucan, Co Dublin, generated quotes from €246 from the online broker, compared with €550 from banks.
In almost all cases banks AIB, Bank of Ireland, Ulster Bank, Permanent TSB and KBC were dearer than online broker options.
Mr Hehir claimed the reason banks charge higher premiums is that home insurance is not their core business.
“It’s just one of the many products and services they offer and so they don’t focus their attentions on getting the best value for customers.”
He advised householders to act a few weeks before the renewal date and search the market for the best value, instead of letting the renewal date roll around and having to accept the new premium that the existing insurer offers.
“I would guestimate that approximately 70pc of Irish people do nothing – and nine out of 10 of these people could get a better deal.”
AIB, which emerged as one of the most expensive providers in the survey, had no comment.
“We can’t comment on figures we can’t validate,” the bank said.
Tips for cutting the cost of home cover
There are several ways to avail of cheaper premiums on home insurance:
Secure your home. Most insurers will offer discounts for people with alarms and/or monitored alarm systems. If you have one of these ask if any discounts apply. A monitored alarm could reduce premiums by up to 25pc. While these may have been expensive a few years ago the cost of alarm monitoring has reduced significantly.
Check policy “add-ons”. Extras like accidental damage are often costly and not always necessary. There’s little point in specifying valuable items such as iPads and bicycles if you opted for a higher excess, say €500.
Increasing the excesses on your policy will invariably reduce the cost of your premium. However, you need to ensure that you don’t end up having to pay out a fortune in the event of a claim – you should always take expert advice when considering changing policy excesses.
Lock in your rate for two or three years. Some insurers are now offering these policies, which means that if a person chooses to opt in for the next two to three years, they will be insulated from any market rate increases during this time. This is a cost effective measure for those who would prefer some sense of certainty when it comes to premiums. There is no charge for this. Instead, there is a small administration discount. If a customer’s premium is €400 for one year, then two years will cost €790, and three years will cost €1,180.
Another benefit of the new product is that the premium will not increase during the two to three years no matter how many claims are made on the policy in this time. Homeowners would normally be hit with a significant premium increase just months after the claim when they go to renew their policy.