Business Personal Finance

Monday 24 July 2017

One in ten reduce home cover as budgets tighten

Charlie Weston Personal Finance Editor

ONE in 10 households have reduced their home insurance cover as cash-strapped homeowners attempt to save money, a new survey shows.

The research by the AA also shows that around 50,000 households have no insurance cover at all.

The survey comes as data from the Central Statistics Office this week showed that the cost of home and contents insurance has shot up by 12.5pc this year.

A poll of 6,800 householders by the AA found that a large numbers of consumers have managed to cut what they are paying for home insurance by covering themselves for less in the event that they have to rebuild their house.

This follows calculations from the Society of Chartered Surveyors earlier this year that rebuilding costs are down by an average of 9pc in Dublin and 7.7pc for the rest of the country.

A lack of cash was one of the main reasons respondents said behind their decision to reduce their building cover.

Consumers said that the hike in premiums due to last November's flooding and the big freeze in January had left them with little choice financially but to run the risk of reducing their home insurance cover.

Director of insurance with AA Ireland, John Farrell, claimed it was a risky policy. "I would advise customers to think very carefully before reducing either their building or house contents insurance.

"Coming into the winter months, as last year proved all too well, our homes are more vulnerable," he said.

"Unfortunately, flash floods, storm damage, freezing weather and fire are a reality this time of year.

"The devastating floods of last November and the big freeze really highlight the importance of having adequate building and contents insurance in place."

Figures earlier this week from the Central Statistics Office showed that home insurance rose by 0.8pc in September and is now up 12.5pc in the past 12 months.

Consumers are also reducing the insurance cover they have in the event of theft or damage to their home's contents.

Some 15pc of homeowners said they had reduced their home contents cover in the last two years, largely because they are struggling to stretch their household budgets.

This is despite a 7pc increase in the number of burglaries in the last year and associated crimes.

An analysis of more than 50,000 AA Home Insurance premiums carried out last month also indicates that one in six residential properties in Ireland have neither alarm nor security lock.

Industry experts said yesterday that they expected home insurance premiums to continue to rise this year.

Insurers lost €197m last year from insurance operations, despite making up some of this loss with good returns on investments.

Irish Independent

Promoted articles

Also in Business