You may have noticed an increase in the premium of your home or property policy this year. Here are some of the reasons that you may have seen an increase this year:
Sums insured & rebuilding costs
You may have read or heard of some of the issues around the cost of building in recent years. Because of a number of factors, the cost to rebuild or repair a house has increased substantially in recent years (If you log on to the SCSI website you will notice the large increase in the cost of rebuilding a property). This has an effect on your home insurance, as it costs a lot more to settle a claim now then it did a few years ago, which increases the premium on policies to match the cost of claim inflation.
If your property is under insured, this could be reflected on the percentage of a claim that will be paid out. Most house policies have what’s called the average clause included. This means that if you have a claim, the company will reduce your claim by the percentage you are underinsured by. Here’s an example – Property insured for €200,000 but correct rebuilding cost should be €400,000. John Bloggs has a water damage claim worth €8000, but due to the under insurance issues the company pays out just €4000.
As a result of this insurers are automatically increasing sums insured (this is also called indexation) and as a result the premium you pay increases to reflect the bigger sum insured on your policy. It is very important to have your property insured for the correct amount, so while no one wants to see their premium rise, it is often vital that you increase your sums insured to avoid under insurance.
Claim frequency & Climate change
Though you may not have claimed from your own policy, significant claim events such as storms and floods have increased in frequency in recent years due to climate change. This in turn has increased the cost to insurers due to increase in the number and over all cost of claims, which in turn increases the overall cost of premiums.
With all insurance types, premiums are cyclical. They will rise due to a number of factors and then fall again once reductions in inflation and competition take effect. If you wish to discuss your insurance premium, feel free to call us on 0818919699.