Over-50s better take cover
We can't avoid motor and home insurance, writes Charlie Weston, but we do more to get a much better deal
HOME and motor insurance are two of the most prevalent general insurance products in the Irish market.
This is because both are a prerequisite, either required by law, as is the case with car insurance, or by a lender, as is the case for homeowners who have a mortgage on their property.
Because so many people need these products there is a lot of variety in the marketplace - and with this variety of product comes a variety of price, according to chief executive of the Irish Brokers Association, Ciaran Phelan.
Jonathan Hehir, who is managing director of InsureMyHouse.ie and CoverInAClick.ie, says: "It is up to each and every individual to ensure that they are getting the best product at the best price. You can get assistance in doing this, but it's up to you to take the initial step and seek it out."
If you are over 50, the likelihood is that you already have home or motor insurance policies, or both, in place.
"My general, but very important, advice to each of you is to take out your policy details, look for your renewal date, and make a note of it in your calendar," Mr Hehir said.
"Two, three or four weeks before this date go and search the market for the best value, instead of letting the renewal date roll round and just accepting the new premium that your existing insurer offers you, he said. "I would guestimate that approximately 70pc of Irish people do nothing - and most of these could get a better deal," Mr Hehir said.
Many people have been with their home insurer for a number of years and don't switch, either due to loyalty or apathy. But there are a number of insurers who have only entered the home insurance market in recent years. They have not been hit by flood claims over the last two to three years. This means their premiums will be lower, Mr Hehir said.
There is huge choice in the home insurance market, and consumers can pay hundreds of euro a year in unnecessary premiums because they haven't shopped around, he added. Mr Hehir said 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 be sure to check out 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 so may be worth looking into.
• 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, of 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.
• 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 or three years then 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 - and there is no charge for this, but instead a small administration discount, Mr Hehir said.
Mr Phelan, of the Irish Brokers Association, advises householders to ensure they do not overinsure or underinsure, as both could cost you dearly in the long run. "This really applies to all types of insurance. When it comes to home insurance, many consumers are still paying over the odds having incorrectly insured the value of the building, rather than the rebuilding cost of their home," he said.
For those who did adjust downwards, it is worth noting that building costs are on the rise and some may now be underinsured, he said.
Contents insurance should also be re-evaluated on a regular basis to ensure valuables are adequately insured and it should be noted that some items need to be specifically added to the policy, Mr Phelan said.
Price discrepancies across the car insurance market are as wide as ever - with some insurers charging a multiple of others for the same level of cover. "The motor insurance market has always been wide open in terms of pricing," Mr Hehir said.
What many people don't realise is that certain insurers directly target a niche in the market and if you fall outside that remit, then you may find yourself paying over the odds. There are certain factors that will always affect your premium - the main thing is your driving experience, ie the number of years' claims-free driving experience a client may have, including the number of years a full/learner licence has been held.
Another major factor is the age of the driver and the type and age of the vehicle. For those of a certain age, this can either be a good or a bad thing - if you have a clean driving history, with little or no past claims, then this will stand to you.
However, if over the course of your driving life you have amassed a multitude of claims, then this may result in a significantly higher premium. However, aside from that there are a few other measures you can take to reduce your bill.
• Check the differences between third party, fire and theft and comprehensive. It might not be financially sound to pay the difference, depending on the value of the vehicle. Only pay for the cover you require. If your car is a banger, there's little point in having comprehensive cover.
• Additional security features can make a difference so make sure you tell your broker if you have an alarm, immobiliser or if your car is kept in a garage.
• Ask your insurer if you are eligible for a discount if you have more than one policy with their company.
• Try adding a driver to your policy. In a lot of cases, the insured and spouse/partner rate is lower than the insured only.
• The occupation you go under may have a significant difference on your premiums. Most of us could truthfully describe our job role in a number of different ways - administrator, clerk, manager. You must still be wholly honest, but ask an expert about this and you could end up with a saving.
Mr Phelan warned that excesses can be contentious. This is the amount you have to pay yourself when you make a claim. "On one hand it can be worth agreeing to a small excess to reduce your overall premium. On the other, there is no point taking an excess on the policy if it's so big that, should you make a claim, you have to shell out a significant amount of cash before you can. Talk to an expert about these before you agree to anything - while immediate gratification and a reduced premium can be attractive, you need to be sure it won't end up costing you in the long run."