Premium pains: claims make home cover difficult
If you are burgled and have to claim on your household policy, writes Charlie Weston, prepare for a huge increase in the cost of insurance -- and some companies won't even give you a quote
YOU have been paying your home insurance diligently for years, never missed a payment and never made a claim.
Then one day, the house is burgled and your jewellery, watches, cash, laptops, car keys and flatscreen TV are stolen.
You make a claim to your insurer for €12,000 to make good the loss. The insurance company sends a loss adjuster and assesses the cost of the claim.
After a few weeks, you get a cheque from the insurance company and you set about replacing the stolen items.
All is well with the world again -- until you go to renew you home and contents insurance.
Your current insurer wants to charge you twice the previous premium amount, so you try other insurers. However, most other insurers are not interested in providing you with a quotation for insurance.
The National Consumer Agency (NCA) found that six insurers refused to quote for house insurance for a Dublin home after a €12,000 claim was made for a burglary.
The refusal of insurers to quote for someone who has made a large claim stops people shopping around, the NCA, a State body, said. By shopping around, homeowners can knock as much as €400 off the cost of the premium.
The NCA sought home-insurance quotes for a mid-terrace, three-bedroom townhouse in Milltown, Dublin 6. The cost of rebuilding the house was put at €350,000 and the contents were valued at €75,000.
Two sets of quotes were sought -- one for the house and contents in a situation where there had not been a previous claim for a burglary and one where €12,000 had been claimed for a burglary last year.
Quotations for the house that had not been burgled ranged from €422 to €782.
However, once quotes were sought for the same house where a claim had been made, six insurers refused to quote. There were Allianz, Aviva, Axa, ChartisDirect, FBD and Zurich.
Two firms did quote. RSA Insurance quoted €706, while Quinn Direct said it wanted €1,083.
Director of financial information at the National Consumer Agency, Karen O'Leary, warned that consumers who have made claims in the past are finding it difficult to make get insurance.
She said insurers will not provide a quotation if:
- There was a claim for more than €10,000 in the past three years
- There was more than one claim, for any amount, in the past three years
- There were two or more claims of more than €5,000 in the past five years.
She said: "If you are having difficulty getting quotes due to a previous claims history, you could approach a broker that deals with a large number of insurers. They will be able to offer you help and advice."
There was also evidence that consumers may have difficulty making a claim for a burglary that occurred when the house was unoccupied and the alarm was not turned on.
A number of firms confirmed that they would not pay out on a claim, with some firms specifying that they would not pay out if the consumer had availed of a burglar-alarm discount when taking out the policy but did not set the alarm.
Head of lobby group the Consumers' Association, Dermott Jewell, accused insurers of adding to the trauma for those who experience a break-in.
People end up having personal items stolen during a burglary, he said, and they then find they cannot renew their insurance without paying a huge premium.
"If insurers are not prepared to quote you when you make a claim, then they should print that in bold type on the front of all their documents, so people know where they stand. It seems that if you claim, you will pay dearly."
The head of the representative body for insurers denied that his members were discriminating against those who are forced to make a claim.
Chief executive of the Irish Insurance Federation Mike Kemp said insurers had lost around €174m on household business last year.
And claims from householders this year were set to be higher because of the flooding and the big freeze last winter.
Asked if insurers were discriminating against homeowners who have had to make a claim, Mr Kemp said: "No. Each company is free to set its own rates. It is a free market." He added that it was a very difficult market for household insurers.
The NCA survey, which features a range of profiles in Roscommon, Donegal and Dublin, highlights the savings to be made by shopping around for home-insurance quotes, with potential savings ranging from €120 to almost €400.
The home-insurance cost comparison also featured a number of student profiles and reveals the cheapest way for students to protect their belongings when they go to college.
It showed a €211 difference in home insurance for students.
The cost-comparison survey features a 20-year-old living in student accommodation in University College, Cork, who requires contents insurance of €3,000.
Four firms declined to provide a quote for the student.
- See www.itsyourmoney.ie for more of the cost comparison survey details.