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Money Times - 27/05/09

Posted by Jill Kerby on May 27 2009 @ 23:14

 

YOUR INSURANCE NEEDS INFLATION-PROOFING

 

There’s a lot of talk about the falling cost of living here – we’re in a deflationary environment with the cost of many ‘consumerables’, like food, housing, clothing and footwear, cars and electronic goods all tumbling in price. 

 

Not so for some bigger ticket – and very essential purchases -  like motor, home and health insurance.  A couple of months ago I wrote about ways to save on health insurance, which after the 23% increase by the VHI last January (the biggest provider with nearly c1.5 million members) has become a luxury that many individuals and families simply can’t afford anymore. 

 

That said, there are ways to mitigate this cost and still have some cover:  

You can drop down to a cheaper plan.

You can transfer to a better value provider – just be aware of the switching restrictions if you have an existing medical condition. There’s no problem if you are switching to the same level or a lower level plan, but you will have a waiting period (to cover your medical condition only) if you want to switch to a better plan. 

You can drop the expensive health insurance scheme and opt for a cash health plan like HSF (see HSF.eu.com/Ireland/) where a single premium will cover the entire family for a part payment towards your GP, dental and optical expenses, a visit to a physio or chiropracter, a consultant, for day or overnight visits to hospital, a recuperation grant and even a lump sum for having a baby. HSF plans cost just between €2 and €12 per week.

 

If you’ve had health insurance for many years and have never reviewed your policy, you should certainly do so this year. Do it yourself (with some difficulty, albeit) by going onto the Health Insurance Authority website (www.hia.ie) and use their comparison tables, or use the services of a broker you know who will charge you a modest fee rather than take commission for any switch.  (www.healthinsurancesavings.ie) 

 

Paying for health insurance or a health plan is discretionary:  motor and home insurance is not and the cost of these mandatory contracts is going up this year, in some cases by as much as 20%. 

 

The insurance companies say that accident claims are up, which does happen during a recession when money is tight and small dents or accidents that you would have paid for yourself now seem worth the effort of the claim. But the insurers are also suffering from their own investment losses and lost market share, and these inevitably get passed onto the customer. 

 

A very good general insurance broker told me last week that there are plenty of things you can do to lower the cost of motor and home insurance, but he also warned that going for the lowest cost premium (usually available from on-line or even ‘direct’ providers of the well-known insurers) can be a false economy. “They won’t necessarily remind you of the pitfalls – like underinsuring your contents,” he says, only for you to discover that the insurer will only pay out a proportion of the underinsured amount. “They might not remind you either of the importance of having a ‘no claim bonus safeguard’ clause for your car, or a ‘driving other car’ extension.”

 

So what can you do to actually reduce the cost of Motor/Home insurance?

Shop around!  Too many of us, especially for more complicated home insurance contracts, simply renew the cover each year without taking the time to go through the lengthy booklet or to compare prices with other providers. Check out the Regulator’s home insurance website survey at www.itsyourmoney.ie.  Call a good broker or do these calls yourself. 

 

 

Motor insurance costs are partly based on your age, location and driving record, but the age, model and make of the car is just as important.  Do you really need comprehensive insurance for a six or seven year old car? Its age alone should bring down the realistic cover you need …and the cost. 

 

Consider accepting a larger excess. The larger amount you agree to pay in the event of a claim, the lower the premium.  This might be a good incentive to drive more carefully, or be more safety conscious in your home.

 

 

Get good mortice and window locks installed. Use the home alarm – always.  Get it monitored by the alarm station.  Join the neighbourhood watch.  All these features will reduce the cost of your home insurance by 5% savings increments.  (You might even ask if your pet Doberman or shepherd is worth a 5% discount, but I was once told this only happens if the dog has public liability insurance of his own. No savings there then.)

 

 

Finally, the cost of rebuilding a damaged property has fallen significantly, says the Society of Chartered Surveyors (www.scs.ie). If you haven’t had your re-building costs reviewed in the last year, you are probably paying far more for your house insurance than you should be. 

 

 

 

 

 

 

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