Home in on the fine detail
The most common mistake people make when it comes to home insurance is paying over the odds for cover, writes Sinead Ryan
The biggest switch in your home insurance often isn't between different companies; it can be simply within your own policy. There are three elements to every contract:
- The 'Building' insurance which covers your costs if the structure of your house is damaged (e.g. subsidence, fire etc),
- 'Contents' cover which insures your regular stuff like furniture, clothes and gadgets.
- There's also an 'All Risks' section which is for specialist, expensive or particular items like jewellery, paintings, bicycles, computers etc.
If any of these are over the 'per item' limit on the policy, normally €1,000-€2,000, then they should be insured separately, which will carry an extra premium.
Many people make two fundamental mistakes which add to their premium amount, usually inadvertently: the first is insuring the house for what it's worth if they were to sell it, and the second is over-insuring the contents.
Insuring your house for it's re-build value only is crucial. The land does not need to be re-bought in the case of a catastrophic incident, so why insure it?
Rebuild costs vary by house size and county, so using your insurance company's guide (on their website), or the Society of Chartered Surveyors rebuild calculator (www.scsi.ie) is the first step. The difference is obvious, especially if you live in a city.
For example: A four-bed semi-detached house in Stillorgan (1,400 sqf) which would cost €650,000 to buy, is valued at €278,000 for rebuilding purposes. Insuring for any more is a waste of money since you won't be able to claim it.
When insuring contents, don't go by the lazy option of a percentage of the building costs. Some insurers 'suggest' this, e.g. 40pc, and it's far too much, unless you have gold-plated taps and wardrobes that are full of designer gear.
Instead, calculate room by room the probable cost of replacing everything if it were lost in a fire, say. Bear in mind that only some policies have a 'new for old' clause, so you will in fact not get the 'new' value, but the discounted one for say, a six-year old sofa, instead. It's always worth asking which you have and deciding whether to pay the extra premium.
How to switch... Home insurance
STEP 1 Calculate re-build and contents replacement costs properly.
STEP 2 Call your existing insurer at renewal time and ask for a premium based on new information. Then, call up three others for similar quotes.
STEP 3 Compare the policies on other merits also (e.g. level of ‘excess’, new for old clauses, what else it covers etc).
STEP 4 Decide on best, pay an annual premium to save interest on monthly collection fees unless insurer doesn’t charge it.