Home insurance (buildings & contents)

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Home insurance is something no homeowner ought to be without, nor should you try and skimp on cover.

But as insurance premiums continue to rise even as other costs of living fall sharply, there are ways to cut the cost of your premium without compromising your cover.

The first and most obvious way to cut the cost of your cover is to shop around. This doesn’t mean every few years, but every time you renew.

This means you should not automatically pay your renewal when it comes in the door but shop around for the cheapest quote.

Check you are not over-insured

But before you do that, you should first check that you are not over-insured.

This is important because recent figures from the Central Statistics Office figures showed that home insurers hiked premiums by 25pc between 2008 and 2009, at a time when the cost of rebuilding damaged houses fell by 5pc.

The Society of Chartered Surveyors (SCS) produces an annual guide to house rebuilding costs. The 2010 version http://www.scs.ie/2010-SCS-House-Rebuilding-Insurance-Guide.pdf, published in April, shows that rebuilding costs fell by an average of between 4 and 5 per cent across the country.

The rebuilding cost for a four-bed, semi-detached house in Co. Dublin, according to the SCS, is now €264,164. This cost of rebuilding the same house in 2008 would have been €276,067.

Beware of index linking

However, you should be aware that most - but not all - insurance companies will automatically increase the amount of your buildings and contents cover when they renew your policy each year. This practice is called ‘index-linking’.

You should also check that your contents are not over-insured too. If you take the time to do a quick calculation of your contents, you might be surprised.

If you haven’t done any of these checks, you might find that the policy of ‘index linking’ will have artificially inflated your contents cover something like 100k and over when 40k to 50k would be enough.

Remember that fitted items such as kitchen, timber floors and built-in wardrobes should be included under the buildings rather than contents.

Do you need ‘all risks’ cover?

You should also ask yourself if you need ‘all-risks’ cover.

All-risks cover protects against loss or theft of or accidental damage to your personal valuables, such as jewellery or money, outside your home as well as inside.

Of course, this means you will pay more to have it included on your policy. But you may be insured for the same loss under other policies, such as travel insurance, so check before you tick that box.

Get an online discount

Some insurance firms will offer you a discount if you buy your insurance online.
Growing numbers of people prefer to do their research online anyway as getting online quotes can be less time consuming, but many will still prefer doing it the old-fashioned way.

Increase your excess

It's usually the case that if you make a claim on a house insurance policy you will have to pay a certain amount yourself, which is known as the ‘excess’. The excess you pay will depend on the insurer, but it is usually anywhere up to €300, sometimes more.

But if you agree to a higher excess, such as €500 or €1,000, then you can substantially reduce your premium. While this seems a straightforward way of reducing your premium, it might end up costing you more in the long run.

Other Dos and Don’ts

Fit extra security. Some companies will offer a 10 per cent discount if you have an ‘approved’ burglar alarm, and perhaps a further discount if you have approved security locks and a smoke alarm and if you are a member of your neighbourhood watch or community alert programme.

Negotiate. Shop around for quotes so that if you get a better quote from another firm, you can ask your current firm to match it.

Check charges for paying in instalments. Some insurers charge high levels of interest for allowing people to pay their premiums in monthly instalments, but others don’t, so check the fine print before you sign up.

Tell the truth. If you’re not sure if your burglar alarm meets your insurer’s approved standards, or any other questions about the security of your house, it’s tempting to tick ‘yes’ anyway, but doing this could make your cover worthless.

List valuable items separately. Most home insurance policies will have a single-item limit, usually between €1,500 and €2,000. So if you have a painting worth €3,000 that was stolen but is not listed separately as a valuable item, you probably only get €2,000 back at the most.

Information correct as of 19th May 2010