Consumers hit by home insurance costs hike

CASH-STRAPPED consumers are facing another financial hit to their pocket with news that the cost of home insurance has risen by an average of 6% since April.

A survey by AA Ireland reveals that the average price of a home insurance policy has increased by €28 to €494 per annum.

It also means that home insurance costs are soaring well above the general rate of inflation which stood at 2.7% in July.

The findings are the first results of a new quarterly index on home insurance costs to be published by AA Ireland, which will track a fixed basket of 200 home insurance risks.

The survey analysed 1,800 different quotes from nine different insurance providers.

However, there was better news for consumers in the Dublin area as average insurance costs actually fell by 2.8% — down €13 to €460.

In contrast, homeowners outside the capital saw the average price of a household insurance policy rise by €27 to €518.

Insurance costs for homes insured for building and contents worth less than €250,000 increased by the largest amount — up 8.3% or €35 to €459.

The average cost of insurance for homes valued in excess of €250,000 increased by 3.8% — up €21 to €579.

Commenting on the results, John Farrell, director of AA Ireland Insurance, said home insurance costs were not out of line with expectations.

“While home insurance premiums have increased since the beginning of the year, homeowners are still getting value for money when you think of it in context of the two consecutive bad winters we’ve had and the damage they caused to Irish homes,” said Mr Farrell.

He pointed out that an increase in the cost of home insurance was not unexpected as insurers had dealt with almost 25,000 claims from private households alone last December, after an extended period of freezing temperatures.

The Irish Insurance Federation (IIF), claimed that the total cost of meeting such claims was €173.1m, with another €50.6m paid out for damage to business properties.

Overall, the IIF said it had paid back almost €750m arising out of claims for three periods of severe weather between November 2009 and December 2010.

“Considering the pressure this volume of claims has placed on the industry and concerns about what the coming winter has in store, I would consider last quarter’s increase to be a necessary evil,” observed Mr Farrell.

He expressed concern that some homeowners might consider not paying for home

According to the IIF, the average payout for claims made as a result of the bad weather last December was almost €7,000 per home.