Can you advise me about house insurance?
Q My house insurance premium is constantly on the rise, I’m struggling to maintain it. I’m now questioning its worth because I just spoke with a friend who recently claimed and found their claim was nowhere near what they actually needed to replace the loss. Can you advise?
It’s true, like everything else these days, the price of premiums is rising. But to be honest, not having house insurance is really out of the question. Unpredictable events like fires, floods or robberies leave us heartbroken but, without insurance, in financial stress.
Certainly some sentimental items can never be replaced, but there is a lot to be said for making sure you can recoup some of your losses, regain a sense of stability and start again if the worst happened to your home and its contents.
The question is really about seeking out the best-value coverage. So how do you get the best deal and what are things to be on the lookout for when trying to nab the best deal on home insurance? In my experience the biggest mistake consumers make at present is underinsurance. A rising number of consumers are left vulnerable because payouts have not kept pace with the increase of building costs and materials. For example, a policy previously thought sufficient to rebuild a home following a house fire, might now be insufficient to cover rebuilding costs.
Some homeowners mistakenly insure their property based on the market value as opposed to the rebuilding costs. But in reality for insurance to work for you, your home (and all buildings) should be insured for their full replacement value, including the cost of demolition, debris removal and professional fees. If a property is underinsured, the value of any claim is reduced by whatever proportion is represented by the level of underinsurance.
Here’s a real life example, if your home was destroyed in a storm and was insured for €300,000, but the full rebuild cost is actually €400,000, then you would be underinsured by 25 per cent. In the event of a claim, the most the insurer would pay is €300,000, meaning the policy holder will have to pay the other €100,000 plus any policy excess.
Aside from underinsurance, consumers need to be careful their policy matches their unique needs. For example, does it cover building insurance and content insurance? Is there a one off expensive item like an engagement ring or racing bike included or does that require a separate policy?
I advise consumers to use the free online SCSI House Rebuild Calculator to get a general idea of their potential current rebuild costs. This allows customers to assess if they are covered by their policy. Unfortunately there are some limitations on the type of homes listed on this site.
If you’re worried about being underinsured, a local valuer can do a valuation for you to check your coverage aligns with your home’s actual replacement cost. including any renovations or improvements. Once you have this figure, you can continually update coverage to account for inflation and changes in your home’s value.
Good news!…
The good news is some factors, within the control of some consumers, can lower premiums. Discounts are available if you have an alarm, specific types of locks on doors and windows, smoke alarms and other safety features. Similarly customers may also be able to bundle policies with the same insurer and benefit from discounts this way. If you can, paying your insurance annually might also see you paying less by avoiding monthly direct debit charges. Also, try adding or increasing voluntary excess at your own risk.
How to get the best deal
Make sure you get all the discounts you are entitled to, including loyalty and multiple policy ones. If you’re a first-time insurer, compare quotes from multiple insurers and don’t leave it to the last minute. If you’re already insured, your first step should be to get on to your current insurer and broker and ask them for the best price, then shop around various insurers and brokers to satisfy yourself you are getting the best price.