‘Dangerous’ rush to cut insurance costs

Homeowners and drivers reduce cover to save cash

FOUR in five householders are reducing their insurance cover to save money when they renew their policies, brokers said yesterday.

Householders are trimming away the extras on their home and motor policies, leaving them with just basic cover.

However, Brian McNelis of the Irish Brokers Association fears some consumers are reducing their cover to inadequate levels and might not be covered properly if disaster strikes.

He said: ‘It’s worrying that consumers are contemplating reducing cover to dangerously low levels. This could ultimately mean that should they need to make a claim they may not have the sufficient cover in place.’

Brokers have noticed a ‘ widespread reduction’ in drivers taking out fully comprehensive car insurance as more motorists opting for cheaper third-party cover instead.

However, the cheaper policy only covers drivers for damage they cause to other cars and other road users – and would not pay for their repairs or a replacement car if they were responsible for an accident.

Concerned brokers have reported family members are continuing to drive a car they are no longer insured on because the policy has been changed to a main driver only.

Householders are reducing their buildings and contents cover by removing items from household policies and increasing the excess they pay in the event of a claim.

Mr McNelis said: ‘In all of these cases we would urge consumers first take expert advice before amending their policies so they truly understand the implications.

‘ While consumers are understandably concerned with obtaining the cheapest quote for a given product, the key is actually to look for the best value and product that suits their situation.’

The IBA polled its 400 members and found 80 per cent of their customers looked for savings when the time came to renew their insurance policies. Consumers wanted better deals on premiums or reduced cover to get a lower bill.

A spokesman for AXA said the i nsurer had noticed a similar trend as the market for car insurance had shrunk in the last two to three years.

He said: ‘ There aren’t as many young drivers getting insured, and not as many second or third drivers on the cars.’

Aviva said it has noticed customers are becoming more priceaware too.

A spokesman said: ‘We would also caution consumers to check that they fully understand what their policy covers to ensure that they have the right level of cover to protect them when they need it most.’

The IBA said one way to get value for money on home insurance was to ensure the accuracy of the amount quoted to rebuild the house in the event of a claim.

Mr McNelis said: ‘Building costs, for example, have reduced recently so it is important policyholders are aware of this. The Society of Chartered Surveyors Ireland website gives a good indication of building values and costs.’