Home insurance is one of those bills it’s almost certain you’re over-paying.
Like all insurance, we buy it because we either have to (because the bank insists) or we’re afraid of future costs if we get burgled, flooded or there’s a fire. Most of us couldn’t possibly afford to re-build our houses if the worst happened.
It’s also a product we tend to be lazy about. When the renewal notice arrives, with the inevitable bundle of documents enclosed, we glance at the premium, sigh and simply renew it. That’s a mistake.
There’s huge competition, and not all companies are the same. Just like motor insurance, some of them want your business and others don’t, pricing you out if they believe you’re too much of a risk.
This week, I’m looking at ways to re-calculate your cover to bring down your premium and tips to ensure you’re not over-charged.
Valuing your Cover
There are two elements to house insurance: building cover and contents cover.
Building is for the structure of the house – the bricks and mortar. It’s much cheaper to cover this, since the chances of it all coming tumbling down are slim. However, the big mistake people make is to set their cover at the sale value of the house. This means they’re grossly over-insured, especially in Dublin, where the rebuild costs bear no relation to the value of the house (see table for comparisons).
For example, a four-bed detached property in Rathfarnham or Dundrum may be valued at €800,000, but to rebuild it after a fire would cost €305,000. This is the amount you should cover for. You’ll never get the €800,000 in any event, but may be paying the premium for it.
To find out your rebuild costs, hop on to the Society of Chartered Surveyors site at www.scsi.ie and check out their rebuild calculator. Be generous, and add a bit for comfort.
Contents cover is often lazily assumed as a percentage of the build cover. Big mistake. Unless you have gold-plated taps and crystal chandeliers, you’re over-covered. Take the time to go around your house and actually value your items (again, be generous if you wish). Replacing all your furniture, clothing, jewellery, decorations and the like generally costs far less than you think.
All Risks is a special section of the contents policy and covers items of particular or high value – jewellery, bicycles, laptops, art, for example. This is the most expensive section of your policy, so be careful.
Insurance normally has a “per-item cap” for contents – it could be as little as €1,000. It’s items over this value that should be separately insured under All Risks. This will hike your premium, but these are generally goods that are important to you and harder to replace.
Deirdre McCarthy of www. insuremyhouse.ie says most insurers increase the contents sum insured automatically by at least 10pc during December to cover the Christmas gifts you would have in your home at this time of year, for no extra fee, which is good to know.
There has been an increase in home-owners invalidating their own insurance policy. This means claims won’t be paid, even if they are genuine. Examples, according to Deirdre, include:
Alarm: If you have an alarm discount on your policy, the alarm should be set when the house is not occupied. If it isn’t and you’re burgled, the insurer may invalidate your claim or apply a higher excess on the policy.
Claims: You must declare on your application any and all home insurance claims you’ve ever had, even if it’s on a different property than the one you’re insuring.
Flat Roofs: These must be disclosed as they’re specially insured.
Airbnb: If you let your home for Airbnb, you must tell your insurer. You can get insurance for it, but it’s considered a commercial business and a claim may not be paid on your home.
I asked Ian Kennedy of Blue Insurance, a market leader, about how to save money on premiums.
“You can save yourself both stress and money by buying a two-year policy, saving up to 15pc compared with buying two one- year policies. Installing smoke and burglar alarms will reduce premiums.
“Finally, having multiple insurance products (home, motor, travel) from the same company may get you a discount across the board. At Blue, for example, we discount by €25 for home and motor policies together.”
The table shows a sample of properties and their premiums, but do get three quotes of your own.
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