I got a reminder in the post about my home insurance in the last couple of days. The reminder, from the building society that I already hold my mortgage with...
... said it really paid to shop around for insurance. It promised me three months free cover on my home insurance. Which is great obviously, but what if that's still more expensive than getting insured elsewhere?
A friend of mine recently got a reminder about her home insurance too. The insurance was due to be renewed and it was paying up time. All well and good until she looked at the total due - €798. What? Her insurance premium had shot up for no reason - she hadn't made any claims. On closer inspection of the renewal form she noticed the cost of rebuilding her home had increased to €375,000. Her contents had been increased to €94,000. There were also unspecifieds at €2,250 (limit any one item 1,000) with an excess of €150.
This woman - we'll call her Pamela (she'd prefer not to be identified) lives with her family in a 1800 square foot, five bed detached home, purchased in 2005 in a county neighbouring Dublin. It's not even a county known for its regular floods so there should be no problem getting cheap house insurance right?
Alarmed (groan) at the cost of her renewal she rang the insurance company and asked why the value placed on the buildings and contents had increased so much since the original policy was taken out in 2005. Originally the rebuild cost was estimated at €205,000 and the contents at €50,000. The house was bought for around €425,000.
" I was told the insurance company 'index links' everything every year. The reason for this apparently is because customers tend not to check their policies on an annual basis and therefore if the insurance company did not increase the value of what is insured, the customer would be unlikely to be sufficiently covered in the event of a claim," Pamela said.
While the buildings costs include all fitted appliances, kitchens, wardrobes, tiled and wooden floors and sanitary units, (figures are available from the Society of Chartered Surveyers) Pamela doubted - not unreasonably - that given the downturn it would be cheaper to rebuild her house now, not more expensive. And given that every retailer in the land is slashing prices in a bid to boost business, it would cost less or at least the same to buy new beds, tables, couches and TVs as it did three or four years ago.
So she asked for a revised quote. "The insurer said it could do buildings cover for €345,000, with contents at €60,000. I was not 'allowed' to increase the excess and I received a quote for €607."
Still too expensive in her book.
"I then sought a competitive quote elsewhere. With the AA I could increase the excess to €500 and decrease the limit on any one item to €750. The quote came in at €448. As an AA member I received a 20pc discount, with a final quote of €359." Pamela made a saving of €439.
That's a half year motor tax payment on a 2.1 litre car with €4 left over to buy you a magic tree air freshener, a hefty chunk off your credit card bill or a return flight to New York in September for one costing €429 to stock up for the new season (with €10 left over for some peanut butter M&Ms).
Need we say more?