Getting your house insurance in order
Consumers can protect their valuables and cut bills at same time by shopping around for home insurance, writes Charlie Weston
Some insurers are introducing discounts based on the BER
HOME insurance is an unavoidable cost for families. But many are paying more than their neighbours for their cover. The most recent survey by the National Consumer Agency showed that consumers are paying between €80 and €900 a year in premiums more than they need to be.
This is down to a disparity in the pricing of home insurance premiums. The good news is that there are ways of avoiding this.
The motor insurance industry is renowned for its difference in premiums for the same level of cover across the board.
However, the same variance exists in the home insurance market but this is less well known among the general public, according to Jonathan Hehir, managing director of InsureMyHouse.ie.
"When people approach us for a quote, they invariably tell us whether we've been successful in beating their existing premium or premiums they have been quoted elsewhere. What we have found from these discussions is that only about one in five homeowners have actually shopped around in the past," Mr Hehir said.
THERE ARE A NUMBER OF WAYS OF ENSURING THAT CONSUMERS GET THE LOWEST PRICE FOR THEIR COVER:
Secure your home
Most insurers will offer discounts for people with alarms and/or a monitored alarm system. If you have one of these, then be sure to ask as to whether any discounts apply.
Increase the excess
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.
Check policy add-ons
These 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, of say €500, according to the InsureMyHouse.ie boss.
Some insurers are introducing discounts based on the BER (building energy rating) or insulation of a property. This will reduce the incidence of burst pipes. This is a relatively new phenomenon and not yet widespread across the industry.
Beware of pitfalls
Mr Hehir said that he advocates cutting costs, but he stressed that there are pitfalls many consumers fall into when trying to shave a few euro off their home insurance premiums.
He said consumers need to avoid these:
Often customers do not take the time to look around their home to find the correct replacement value of their contents and pick a low number out of the air.
All too often people cancel their alarm monitoring service due to cost, but fail to inform their insurer. They then find their claim declined outright in the event of a break-in, Mr Hehir said.
This is a common issue where the customer has increased the policy excess to higher levels in order to reduce the premium, but in the event of a claim they find themselves significantly out of pocket.
Deleting accidental damage cover
Removing the optional accidental damage clause will often expose the customer to more claims
Deleting specified items
Some consumers strip out cover on specified items insured away from the home, such as an engagement ring. This is done to reduce the premium.
Some customers try to list all their items for cover away from the home as specified items where an unspecified figure will cover the same thing at a potentially cheaper cost.
It is quite common for occupants to assume that their contents are insured along with the building on the group policy. Unfortunately, this isn't the case.
Reducing the sums insured on the building
Now that property values have dropped to such an extent, there are growing instances where the rebuilding cost is considerably greater than the market value, so don't be tempted to drop below the rebuilding cost, Mr Hehir says.
Reducing cover on the contents
People are now less likely to upgrade their furniture due to economic times and are tempted to insure it for what "it's worth" forgetting that they have to replace it with new furniture if it's destroyed.
Gaps in cover
Some consumers are leaving gaps between the end of one policy and the start of the next, sometimes even waiting on the mortgage provider to prompt them to take out a next policy.
Case study: Karen O'Brien
GETTING good value for products and services that her family buys is important for Karen O'Brien.
A former markets trader with Ulster Bank, she has no fear when it comes to questioning companies about what they offer and making sure her family gets plenty of bang for its buck.
"I just ring around for everything. I price everything and I am not afraid to do it," the homemaker, who lives in Lusk, Co Dublin, says.
In the past few years she has switched the family's health cover from VHI to Aviva, and now the O'Briens are with Laya Healthcare.
Ms O'Brien and her husband Noel have three children – Ellen (18), Lauren (14) and Rory (13). All three are in secondary school in nearby Skerries.
The family moved to Laya's Essential Connect Family scheme, a switch that saved them close to €500 and saw the children get better cover.
When they were with Aviva the O'Briens had split their cover, putting the children on different plans to the adults. The Laya cover for the family costs them €2,050.
Mr O'Brien is a management accountant with Aer Lingus, and Ms O'Brien works in the home and makes sure to get value for money for the family.
She says she is an inveterate switcher, with regular moves made to ensure the best value electricity, gas and broadband supplier.
Ms O'Brien reckons it is a generational thing, as she points out that her parents had to be persuaded recently of the value of switching.
"I always make sure I get a good price. I find it is worth the effort to check out what is available," she says.