AS SAFE AS HOUSES?
Lorna Hogg investigates the increasingly complex subject of home insurance.
Insurance is an important part of our lives - car, life, health, mortgage and travel insurance are major financial considerations in our lives Home insurance, however, is often just an automatic renewal, even a matter of the cheapest we can get. Yet home is the single largest investment most of us make – and all too often, we don’t understand what its insurance cover involves, with expensive consequences.
Jenny and Sean returned home from a weekend break to discover that their son had absentmindedly gone out one morning, leaving the bathroom taps on. The designer basin contained no overflow escape, so water had poured downstairs for some hours throughout their home, before seeping into the house next door. Fortunately, that neighbour had spare keys, which they used to investigate. Jenny and Sean faced ruination of carpets, furniture, and possessions in their own home, plus the cost of humidifier rental, plus redecoration in their neighbour’s home. Even more stressful, the insurance assessor had to be convinced that leaving a tap running, in a basin with no overflow, was a simple accident – and not contributory negligence.
Deirdre tended to simply automatically renew her home contents insurance, sometimes using a price comparison website to ensure the basic `one price fits all’ deal. She was shocked to discover, after fire damage, that her contents cover, while regularly indexed, did not include expensive electrical and electronic items she had acquired over the years, and that `wear and tear’ consideration would influence the replacement payment for her designer carpeting.
The stress over a break in, fire or flood damage, plus the mess and loss can be increased by the horror of gradual discovery that a claim may be refused, or a lesser sum paid out because we do not have adequate cover, or have not fulfilled a requirement. Home insurance policies are complex, and sometimes, the cheapest deal may work out to be very expensive in the long run.
Right now index linking is a factor, following the economic downturn. Index linking ensures that the value of the insured sum keeps up with the price of inflation. The downturn has led to some insurance company reviews of index linking - so, it’s important to check your sums insured each year, to ensure that index linking has not over-inflated sums the sums insured.
Individual homes have individual needs - for example, does your cover extend to accidental damage or third party? Have you named single individual valuable items kept in your home? What is your cover for your computer, and valuable personal or business software? We asked insurance brokers BHP Insurances Ltd. to get back to insurance basics.
Click here to read 'Reading the Small Print ' Brokers Advice
A COVER-UP?
Common reasons for refusal to pay out include:
You’re not covered by your existing policy. Your claim could relate to items which need additional cover, and are not covered by some `one price fits all’ policies, e.g garden equipment, bikes, freezer contents. There may be a maximum amount to be paid on any one item – which can affect jewellery and items such as IPods, mobile phones, cameras.
Required conditions have not been met – e.g. reporting the incident to the insurance company, or to the Garda within a required time. You may not have installed an alarm, e.g. fire or smoke, when it was part of the deal.
Policies do not automatically cover simple wear and tear, or loss.
The house may have been left unoccupied for longer than the period normally covered by your insurance company.
WHAT’S IT WORTH TO YOU?
There’s no doubt that research can sometimes be one of the best form of insurance cover. It’s vital to have details of your important home possessions, as after a fire or burglary, the mess or damage can make it difficult for you to estimate what is missing, and you may leave out items, or have no idea of make or model involved.
Start by checking that you have adequate Contents cover. Work out what it would cost to replace your home contents in case of fire, flood or theft. Include cost of renovation, decoration, furniture, fixtures and fittings in all rooms. Don’t forget clothing, books. DVDs – vital if you have expensive tastes.
Keep any sales receipts, user guides, serial numbers of electrical/electronic items. Take photographs of individual valuable items, or video any collections, e.g. art, antiques.
Do you need any additional cover? Work out what would be most expensive to replace. Is it worth an extra premium for some `new for old’ cover? Do you have Freezer content cover? If you have luxury items, paintings, jewellery, antiques, cameras, they need to be regularly valued and itemised, and under additional cover.
Some items may be very expensive to replace – or even irreplaceable. Title Deeds, legal papers and various Life Insurance/Assurance policies may be safer in a Bank safety Deposit box. Sentimental items, family photographs, small gifts, videos, albums or negatives could be stored there also – their loss is often the one which upsets people the most.
Checking all this will take time – however, as those who have gone through the process (usually after making a Claim) say – it’s enough to make you see the benefits of de-cluttering!
