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Smart Consumer: Eight ways to ease the pain of soaring home insurance bills


Michael Kearney

Michael Kearney

Michael Kearney

Just when you thought it could not get any worse, it emerged this week that home insurance is set go up again this year.

Blame the Big Freeze over the Christmas and New Year period, say the insurance companies.

Severe frost and snowfall last November, December and January brought several parts of the country to a standstill.

This led to payouts totalling €224m on weather-related claims for last December and January as 30,000 people sought compensation for burst pipes and damage to houses, the Irish Insurance Federation said.

The total for freeze claims since 2009 was now €750m, insurance federation boss Mike Kemp said.

Consumer groups argue that the industry should have seen it coming, as this is the third year in a row that bad weather at the turn of the year has led to a splurge of claims costing millions of euro.

Whatever the reason, premiums are set to rise by around 10% again this year. This comes on top of a rise of 10% in household premium rates last year, and a 10% rise in 2009.

That amounts to cumulative rises of 30%, making it imperative that every household works extra hard to get better-value home insurance cover.

Here are eight tips to cut the cost of your home insurance. Not all of them will be possible to implement, but you should make savings of up to €300 a year by putting some of them into action.

1 Rebuilding costs down Households have been urged to secure a reduction in their home insurance after it emerged that there have been decreases of up to 20% since 2008 in the cost of rebuilding the average house.

The cost of replacing a three-bed semi-detached house has plunged by one-fifth since the start of the downturn, a new study shows.

The Society of Chartered Surveyors (SCS), which compiled the survey, said the findings should lead to a reduction in house-insurance premiums across the market.

It now costs €244,500 to rebuild a 1,500 sq ft three-bed semi-detached house in Dublin, down from €306,000 in 2008. This is a fall of 21%.

This general pattern of price falls was repeated in other cities, although there were some regional variations.

Check out www.scs.ie for a guide to the rebuilding costs across a range of cities and towns.

But be careful not to under-insure your house because if you make a claim and your insurance is too low you will not get compensated for the full value of your loss.

The individual savings will vary but on a standard property one could be looking at savings of €30 to €50.

2 Contents over-insured This can sometimes be a big one. Consumers often over-insure their contents, according to Frank Conway of personal finance website MoneyCoach.ie.

"Remember, this should only include 'moveable' items such as furniture and so forth and not bathroom fittings and fixtures, which fall under the replacement costs of the home insurance policy," Mr Conway said.

Home insurance has two components -- the rebuilding part and the contents.

Try and get a decent estimate of what it would cost to replace the likes of the TV and beds by looking at a catalogue or adverts in newspapers.

The cost of buying many household goods has fallen lately.

Savings of between €50 and €70 per year are possible by being smart and insuring only the value that contents are worth.

3 Get an alarm If your home alarm has been upgraded to one that is approved by the National Standard Authority of Ireland (NSAI) then let your insurance company know.

The good news here is that the saving could be up to €40.

Monitored alarms can generate higher savings but the cost of paying for the monitoring service can eat into any additional savings, Mr Conway said.

Security locks, smoke detectors, and being a member of Neighbourhood Watch may also help you to get a discount.

For those with monitored alarms, savings of between €60 and €80 could be possible.

4 Pay once Paying your insurance premiums in a lump-sum, if you can afford it, as opposed to monthly instalments, will be cheaper.

In some cases, consumers can save 3% or more off the cost of their annual insurance premium.

This could save in the region of €20.

5 Credit union discount Some 125 of the credit unions in the State offer insurance cover that comes with a 10% discount on motor, home and travel insurance.

The insurance deal is offered through a company called Le Chéile and underwritten by Axa Insurance. With this offer you can pay your insurance premium monthly without incurring any interest as long as you set up a direct debit.

A further 15% discount is available on your home policy if you take out a motor policy underwritten by Axa. This could amount to a saving €30.

6 Claims history There is no suggestion here that you should not claim for a big loss, but you should weigh up smaller claims.

Is is worth making a claim for €500 if your policy will just be loaded by an insurer determined to get their money back when it is time to renew next year?

Mr Conway said: "Claims history does matter and does add to the cost of insurance premiums. Try to make claims meaningful."

7 Package deals Some insurers offer better value deals with their bundle offers.

While it is important to make sure that the overall bundle deal is competitive, it can result in a good offer for home insurance.

Savings of between €20 and €40 per year are possible.

8 Get in the habit of comparing

Never take it for granted each year that your own insurer will offer you the best deal when it is time to renew.

Each year, get in the habit of being prepared to switch and see if your own insurer will match the best offer.

Potential savings range from €123 to almost €400 on annual home and contents insurance, according to the National Consumer Agency.

All but one firm (RSA) confirmed that they offer no claims discounts (varying from 10% to 30%) for home insurance policies.

Check out the National Consumer Agency's website, itsyourmoney.ie, for an indication of the cost of insurance for a house in a location similar to your own.

Irish Independent