Last month, the National Consumer Agency (NCA) published a survey showing just how much consumers can save on their home insurance by shopping around. Indeed, it found a differential of €421 on the price of insurance for a three-bedroom bungalow in Midleton, Co Cork, between the cheapest (€279) and the most expensive quote (€700).
So shopping around clearly makes good sense, but there are other points you should consider before buying home insurance to ensure you get the best product to suit your needs – at the best price.
Do shop around
Yes, you may be caught for time, and yes, it may be easiest to do nothing and simply let your current policy roll over for another year – but this is likely to cost you money. After all, insurers are aware a certain proportion of customers will forego shopping around for the ease of having to do nothing, and so they will likely increase the renewal premium they quote you. So even a quick call to your existing insurer asking for a better quote might save you money.
According to the research from NCA, just 37 per cent of consumers had shopped around for a better deal on their home insurance in the past year, and only 13 per cent had actually switched. But of these, 83 per cent said they found the process easy.
One thing to remember when you do shop around – make sure you get similar quotes from different providers. Extras to a home insurance policy, such as cover for accidental damage and specified items, such as jewellery or an expensive computer, will drive up the cost of cover – so make sure you’re comparing like with like.
Think before opting for a higher excess
A simple way of bringing down your home insurance is to increase your excess – this means you will have to pay a specified amount towards any claim that you make. Typically, the standard excess varies from €250 to €500.
It’s an easy way of getting a cheaper policy. For example, Axa automatically applies an excess of €350 to your home insurance policy. However, if you opt to increase it, you can bring the value of your policy down. Take an annual policy priced at €380.74 – by increasing your excess to €450, you can bring the policy down to €371.23. Push it up to €1,000 and the premium falls to €352.19.
However, remember if you do make a claim, you will be significantly out of pocket – and as the above example shows, the savings aren’t that significant. While this might not perturb you too much if your claim is for €20,000 and you have an excess of €500 on your policy, it will hurt if you need to replace the lock on your front door following a burglary – and the total cost comes to €600.
In addition, it’s likely you will have to pay a higher excess for water damage and subsidence claims. According to the NCA survey, the excess for water damage was at least twice that of the standard excess, ranging from €500 to €1,000 amongst all the providers it polled.
For example, RSA has a subsidence excess of €1,000 on its policies, while a leak from a fixed water or heating installation or domestic appliance incurs an excess of €600. Over at Axa, customers must pay the first €5,000 of any subsidence claim, or the first €1,000 for a claim for a leak.
Check what building cover you need
The Society of Chartered Surveyors Ireland (SCSI) has a handy re-building cost calculator on its website: www.scsi.ie. You just need to put in the information pertaining to your property and it will give you typical rebuild costs.
For example, a typical 4-bed semi-detached house (1,500 sq ft) in the Cork area would cost €194,600 to rebuild. If it has a garage attached, then you can expect to pay an additional €13,730 to rebuild.
The same property would cost €247,520 to rebuild in Dublin, or €169,960 in the north-west region.
Avoid paying in instalments
With property tax already burning a hole in our wallets, and water charges on the way, it’s no surprise many of us opt to spread out our repayments over 10-12 months. However, opting for a longer payment path may hike up total costs.
While Bank of Ireland, which offers home insurance through RSA Insurance Ireland, offers a free monthly instalment plan, with other providers you can typically expect to pay interest at a rate of 15-30 per cent for paying a premium monthly. Aviva, for example, applies an APR of 20.08 per cent on the outstanding sum. So, for a policy of €378.11, this works out at an additional €26.49 if you spread the repayments over 10 months.
Don’t under-insure your property
To save on the costs of home insurance, it’s tempting to undervalue your rebuild and home contents. However, if your insurer applies the so-called “average clause”, which limits what you can claim if you’re under-insured, this could get you into trouble.
For example, if the contents of your home are worth €40,000 but you insure them for just €20,000 you are underinsured by 50 per cent. If your contents are damaged, destroyed or stolen, the most you will get from your insurance company is 50 per cent of the total damage – so a claim for €10,000 will only get you €5,000.
Don’t expect cover if you’ve been flooded
Following the deluges across the country in the earlier part of this year, the NCA asked the eight insurance providers it surveyed to quote for a property which was located in an area prone to flooding, which had a flood damage claim in the last five years. None of the providers were willing to offer a quote, although some indicated that “in some circumstances the property would be referred for review, where the specific risk would be evaluated”.
Burglar alarm won’t pay for itself
Fitting a monitored burglar alarm will bring down your home insurance. According to Axa for example, it will reduce your premium by 10 per cent. However, as noted by Caroline Madden in a recent Pricewatch article installing and paying the monthly maintenance fee for a monitored alarm will set you back almost €1,000.
If a burglar alarm pays for peace of mind, it may be worth it, but don’t expect it to dramatically reduce your home insurance premium.
Don’t worry about making a claim
You have a leak in your bathroom and you’ve been quoted €3,000 to fix it. But should you go ahead and make a claim on your home insurance policy or pay for it out of your pocket? It’s a dilemma many of us face, but according to some sums compiled for us by chill.ie, the impact may not be as significant as you might fear.
If you take a typical 4-bed detached house in Dublin 18*, you could expect to pay between €250 to €530 for a home insurance policy, according to chill.ie. Once you’ve made an accidental damage claim for €3,000, however, you would lose your no claims bonus, so wouldn’t avail of this discount. Nonetheless, according to chill.ie, even with such a claim on your policy, you would still get quotes ranging from €250 at the cheapest, although the most expensive has now gone up to €830.
However, if you want to shop around to get the best rate, you might find it difficult to do so. According to the NCA survey, a homeowner in Cork with a claim for €8,000 in accidental damage was only able to get quotes from three out of eight insurance providers. These ranged from €282 from FBD, up to €703 at Liberty.
*Owner occupied, gas heating, no alarm, 2 smoke detectors, €200k buildings cover, €30k contents cover, not within a body of water, dead locks and window locks, 5 years no claims bonus
Home emergency services: Are they any good?
Just like insurance providers increasingly offer breakdown assist services as part of your car insurance premium, so too do those which offer insurance for your home. But are they any good?
FBD offers home emergency assist as standard on its policies, which covers “emergency repair work” to your home. This covers damage to pipes, broken doors or windows, storm or accidental damage, which could lead to further loss or damage if not repaired urgently.
However, it will only pay out up to €200 for each emergency, or €254 for broken glass. If the cost of repairs is in excess of this, you might find that you can claim it back in the normal way through your home insurance policy.
Axa Insurance offers €500 for emergency roof repairs or €250 for boiler, water, electrical, heating or similar emergency repairs. Axa promises that making such a claim won't affect your no-claims bonus, and is not subject to an excess.
A more extensive service is available from AA, but it costs €9.99 a month and you have to have your home insurance with AA to be entitled to join its membership service.
It covers blocked drains or leaking radiators; boiler breakdowns;roof damage; broken/damaged windows; electricity failures; pest infestation; broken locks, and will cover the cost of parts and labour, for up to €2,000 per call out four times a year.
