One in four (24%) Irish mortgage holders mistakenly believed they were required to purchase their home insurance through their mortgage lender when buying their home – meaning many homeowners are overpaying for their home insurance.
The nationally representative survey of 1,000 adults commissioned by leading Irish insurance broker Gallagher and carried out by IReach found that more than half of mortgage holders (52%) purchased their home insurance through their mortgage lender. While most did so because they believed it was a prerequisite, one in five (20%) said they did so because it was more convenient, while almost one in ten (8%) believed their lender offered the best price.
Geraldine Kelly, Head of Personal Lines Insurance at Gallagher, said:
“There are a lot of moving parts when buying a home. Between getting mortgage approval, dealing with solicitors and trying to meet drawdown deadlines, it’s understandable that many people simply take the home insurance option offered by their mortgage lender without giving it much thought – even though it might be costing them to do so.
“But it’s concerning that almost one in four mortgage holders believed they were actually required to go through their lender for their home insurance. This is never the case – it cannot be made a prerequisite to getting a mortgage. Banks can often be more expensive on products like home insurance because it’s not what they specialise in – rather it’s an add-on to their main business offering, so they are often not as competitive as other providers. As a result, homeowners could be overpaying on insurance due to this common mortgage myth.”
Additional highlights from the Gallagher research include:
- Four in ten mortgage holders (39%) purchased their insurance from an independent provider because they believed it offered better value. Women were more likely than men to make this choice (43% versus 35%).
- One in ten (9%) chose another provider because they had more trust in the brand.
- Those aged 55 and over were the most likely to purchase their home insurance through their lender (30%) because they believed they were required to do so.
- Almost half (48%) of those living in Connacht and Ulster purchased their home insurance from another provider because they believed it offered better value.
Ms Kelly continued: “One thing many homeowners may not realise is that while a mortgage lender may offer home insurance, they aren’t required to compare their policy against the wider market or tell you if another insurer could offer more suitable cover or a more competitive price. And really, it’s this type of market comparison that is going to save you money in the long run.
“Rather than comparing one or two policies yourself, a broker can assess your individual circumstances and search across a panel of insurers to identify policies that best meet your needs at the best value available. They’ll consider factors such as the rebuild value of your home, its location, security features, claims history and the level of cover you require, before helping you compare premiums, policy limits, excesses, optional benefits and exclusions.
“Home insurance also isn’t something you should arrange once and then forget about. Your circumstances can change over time, whether you’ve renovated your home, improved its energy efficiency, bought valuable new possessions or haven’t reviewed your policy in several years. Taking the time to review your cover regularly gives you the opportunity to make sure it’s still meeting your needs and that you’re continuing to get good value for money.”
Gallagher’s top tips when buying home insurance
- Shop around before making a decision – don’t assume the first policy you’re offered is the right one for you. Comparing policies from different insurers can help you understand the range of cover and prices available.
- Look beyond the premium – the cheapest policy isn’t always the best value. Check what’s covered, including policy limits, excesses, exclusions and optional extras, to make sure the policy meets your needs.
- Make sure your home is insured for the correct rebuild cost – your buildings insurance should reflect the cost of rebuilding your home, not its market value. Underinsuring your property could leave you out of pocket if you need to make a claim.
- Don’t overlook your contents cover – take time to estimate the value of your belongings and ensure your contents cover is adequate. It’s easy to underestimate how much it would cost to replace everything after a major loss.
- Tell your insurer if your circumstances change – home improvements, extensions, energy upgrades or purchasing high-value items can all affect your insurance requirements. Keeping your insurer informed helps ensure your policy remains suitable.
- Review your policy every year – don’t simply allow your policy to auto-renew. Taking time to compare cover and pricing at renewal can help ensure you’re still getting the right protection at a competitive price.