What Will Reduce Your Irish Home Insurance Costs?

It may not be a legal requirement (except in some mortgage-related instances), and is often neglected by Irish home-owners, but insuring your home against damage caused by fire, theft, and other calamities is as important as insuring your car, perhaps even more so. After all, if something terrible happens to your car, you'll still have a home to sleep in. But, if something terrible happens to your home, and you have no home insurance, you could literally end up sleeping in your car!

However, those who do take out an insurance policy on their house make the (often very costly) mistake of sticking with the same insurance provider for years, or, possibly, the rest of their life. They assume it's too much hassle to change to another company and they probably wouldn't benefit much by doing so anyway. But nothing could be further from the truth! Given the ever-increasing level of competition in the Irish insurance market, there is constant pressure on existing companies to force their prices down, as new-comers often undercut them to gain a competitive advantage from the outset.

That why, even if you aren't a first-time buyer, it often pays to check, on a regular basis, that you are getting the best deal you possibly can. This is even more important if you have recently moved house or bought a second home. Also, the amount it would cost to re-build your house after a fire, or other disaster, may have dropped significantly in recent times, especially with the collapse in the building sector of the Irish economy. This could mean you're paying far too much for your current policy, as your insurance company will be charging you based on what it would have cost to re-build several years ago (but, if you actually did make a claim, you would only get the amount of money it would cost to re-build now instead).

Another factor influencing costs is how much you estimated the contents of your house would cost to replace if destroyed or stolen. If you over-estimated their value, again, your insurance company will charge you based on that estimation but would only pay out what they actually cost when you do go to replace them. (In other words, you'd be paying to insure value that doesn't really exist and that you can never benefit from if you make a claim. The only beneficiary is your insurance company's bank account!)

Yet more factors that could potentially reduce the cost of your policy are if the house is now more than 10 years old, or if you (or someone that lives in the house with you) are now over the age of 50, or are at home during the day. Also, installing a burglar alarm and a smoke detector will have a downward effect on costs, as will living in a neighbourhood watch area. And, while you're at it, see if you can take out your car insurance policy with the same company, as most will gives additional discounts if you have multiple policies with them. (That said, you shouldn't do this unless the reduction in your car insurance costs makes it worthwhile. There's no point transferring your car insurance to save on your home insurance if the cost of your car insurance actually rises in the process!)

Of course, there are some things that might actually increase the cost of your insurance and, believe it or not, that isn't always a bad thing. For example, if you have acquired new valuable items such as a wedding ring or other jewellery, then the amount the contents of your home are insured for if they are destroyed or stolen might not be sufficient to cover the cost of these additional items. In that case, it's worthwhile increasing the level of cover you have. The same applies to other valuable things like expensive paintings, or that new flat-screen TV you got at Christmas. (Of course, the opposite applies too: if you have disposed of a number of valuable items, then the contents of your home wouldn't cost as much to replace, so you should actually reduce the amount of insurance you have (and, therefore, the amount it costs you) to compensate for this.)

Also, if you have added an extension to the house, or perhaps converted the attic into a bedroom or study, then the amount it would cost to re-build your house to the way it is now, if it was destroyed at some point in the future, may have increased significantly, but the current insurance policy you have may not pay out enough money to do that. So, again, in a scenario like this, it's actually worthwhile increasing the amount of insurance you have.

Basically, everybody's circumstances change on a regular basis so, at the very least, doing an annual review of your needs in regards to home insurance could save you quite a lot of money in both the short-term and the long-term. As will shopping around simply to take advantage of the competitive pressures on insurance companies: In a major cost-comparison study of the market in 2008, the Financial Regulator found a difference of as much as 221% in quotations for the exact same customer in the exact same circumstances!