Once you become a home owner, you’ll have to pay for far more than just a mortgage every month. House insurance is not a fun purchase, but it is one that can save you money if something untoward occurs.
With a large number of insurers out there, choosing which policy best suits largely depends on your own circumstances.
Rule number one is to simply to shop around. A recent study by the National Consumer Agency (NCA) showing differences of up to €362 on the annual home insurance premium charged by different providers.
A second tip is to check whether you are insuring too much or too little.
Essentially, there are two components to home insurance you must consider – buildings insurance and contents insurance. Buildings insurance is based on the rebuilding cost of a property rather than its market value. Contents insurance, which covers your household goods and personal effects, is usually calculated as a percentage of the buildings insurance.
It’s important to remember that most people tend to be overinsured for buildings cover and underinsured for contents cover. Making sure you make neither of these mistakes will go a long way to helping you get the right insurance policy.
The NCA warns that if your home is insured for too little, your policy might not pay out enough for the full cost of repairing or rebuilding it if disaster strikes. It adds that if your home is insured for too much, on the other hand, your premium will be higher than necessary and you will not get any extra benefit if you have to claim, as you are only covered for the actual cost of rebuilding or replacing contents.
The Society of Chartered Surveyors has a free rebuilding cost calculator available on its website (scsi.ie) and a smartphone app that is useful for anyone considering a buildings insurance policy.
For contents insurance, the NCA advises homeowners to check the terms and conditions of policies, particularly in relation to the level of excess applied and whether to specify high-value items for ‘all-risks’ cover. Don’t forget to check discounts for house and fire alarms, and Neighbourhood Watch membership.
If you’ve just moved into an apartment and are paying management fees, remember that buildings insurance is usually covered within that charge. But consider taking out contents insurance as it would be extremely expensive to replace all of your belongings if they were damaged or destroyed.
