Houseowners paying up to €200 too much for home cover

Banks are charging up to 90% more for their own preferred house insurance products.

Insuremyhouse.ie ran a cost comparison against some of the leading banks, sampling a number of house prices and locations, with banks being, in the main, more expensive and often much more so.

“We took four typical home insurance cases, researched just how much each bank was quoting for each case and compared this with the optimum quote that we were able to get from the insurers we deal with. The price differences are huge. In more than one case, the bank quoted a premium that was 90% dearer than the cheapest quote on the market. In monetary terms, we could see that one homeowner could be paying €178 more a year than their neighbour for the same home insurance – depending on who they take their policy out with”,

“Home insurance is not a core product for any bank," said Jonathan Hehir, Managing Director of Insuremyhouse.ie.

Most banks treat home insurance as just an add-on they can sell to homeowners who take out a mortgage with them, or who simply just bank with them and think that it’s ‘handy’ to go to their bank for their insurance needs also. So banks are not trying to appeal to people based on price – hence the expensive quoteswhich are simply not competitive in the current marketplace. Our experience suggests that there is an assumption which permeates the mortgage holder market – that people are obligated to take our house and/ or life insurance with the bank with which they are taking out their mortgage. This is simply not the case. And often what happens in these cases is that the cost of their insurance comes out with their monthly mortgage repayment which means that some people simply have no idea how much they are paying for cover”.

The insurance experts say that just about every household in the country pays home insurance every year – for 30, 40 or even 50 plus years, which means that savings of €100 or more a year can really add up.

Mr. Hehir continued,

“While €100 a year might not be ‘big money’ to some, it would certainly be a welcome saving to others. And regardless of financial needs, why should people pay over the odds for the same product, when it is so simple to get the best price available if you know where to go?

Home insurance is far more stable than motor insurance at the moment and it represents good value for money for homeowners. However, that is not a reason for customers to rest on their laurels and simply let insurance premiums roll over when it comes to renewal time. These sample costings demonstrate the huge price differentials that exist in the market and we’re making it a priority to make people aware of this and to save people money.”

Insuremyhouse.ie say that there are several ways to avail of cheaper premiums on home insurance:

- Secure your home: Most insurers will offer discounts for people with alarms and/or monitored alarm systems. If you have one of these be sure to enquire whether any discounts apply. A monitored alarm could reduce premiums by up to 25%. While these may have been expensive a few years ago the cost of alarm monitoring has reduced significantly so may be worth looking into

- Check policy ‘add-ons’ – extras like accidental damage are often costly and not always necessary. There’s little point in specifying valuable items such as iPads and bicycles if you opted for a higher excess, say €500

- Increasing the excesses on your policy will invariably reduce the cost of your premium. However, you need to ensure that you don’t end up having to pay out a fortune in the event of a claim – we would advise that you always take expert advice when considering changing policy excesses.

Small print caught out Robin and Glenys

Ophelia didn’t bother Robin and Glenys Rowland despite causing €900 worth of damage in their Wexford home.

It was when they tried to make a house insurance claim for their losses that their blood pressure went through the roof.

The small print on their policy means they stand to lose more money than they gain by finally using the insurance they paid thousands for over 13 years of cover.

“Untill now we have never needed to make a claim,” said Robin.

“But due to the recent storm we lost the contents of our chest freezer to the value of €888.55.”

On contacting Liberty, the Rowlands found the maximum claim they could make was for €700 – and they also had to pay a €250 excess (the portion of every claim not covered).

That left €450 worth of cover – covering to just half the damage done.

But the small print of the policy had another ‘sting in the tail’ for the Rowlands, who live in Kilmore Quay. They were told that if they made a claim, the cost of their policy would rise and they’d lose their no claims bonus.

Robin calculated that they’d end up out of pocket if they asked their policy to do what it was meant to do over all these years – provide protection.

Robin accepts the policy excess is “fair” but he’s up in arms about the no claims bonus rule.

“We have decided that it’s not worth claiming as it would take 5 years before we get back to where we are today,” he said.

“When living in the UK, I had to make a similar claim and found out then that the freezer was treated like windscreen cover on a car with no effect on the cost of the policy.”

We contacted Liberty and provided them with details of Robin’s calculations. They didn’t wish to comment on individual cases but did not dispute his conclusions, confirming that no claims bonus protection is not a feature of their policies.

Apparently, while some policies do have it here and it is widely available in the UK, no claims bonus protection is not a generally provided by Irish house insurers.

Most car insurers offer customers  full no claims bonus protection at a price - or they may get step back bonus protection.  This means that if you make a claim, you lose just a portion of your valuable bonus - unlike the Rowlands who seemed set to lose it all by claiming.

Boss of online broker Blue Insurance Ciaran Mulligan said some household policies do protect no claims bonuses.

“If this customer was with Blue Insurance, we would only have ‘stepped him back’ two years (meaning he’d still have three years’ worth of no claims bonus).”  

“We don’t specify all scenarios but anything under €500 would receive a two year step back every time.”

He said customers can save money and protect their no claims bonuses by taking out policies over two years instead of one.

“Our two year offering has a 15% discount applied and protects customers from any price increases for two years regardless of claims made or not,” he said.

Another way to save money to pay for better quality cover is to ignore your ‘friendly’ bank’s offer of may be pricey cover and go to an online broker.

 A recent survey from insuremyhouse.ie showed banks are ripping off customers by making them pay through the nose.

 “On a sample €250,000 terraced property in Co. Louth, a customer would be paying almost three times more for home insurance through (one) bank (€447) than if they went through a broker (€157),” said managing director Jonathan Hehir.

 “This is a huge difference of €290 or 184%!”

 In another example, insurance for a €300,000 detached property in Tallaght came in at €503 with a bank and €324 with a broker – a difference of €264.